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Long-Run Welfare Effect of Energy Conservation Regulation

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  • Matsumura, Toshihiro
  • Yamagishi, Atsushi

Abstract

We investigate the long-run effect of energy conservation regulation, which forces firms to raise energy-saving investment above the cost-minimising level (i.e. the business-as-usual level). If Pigovian tax is imposed, additional regulation always harms social welfare under perfect competition. However, under imperfect competition, additional regulation can improve welfare even if Pigovian tax is imposed. Thus, under imperfect competition, there is a rationale for additional energy conservation regulation even in the presence of Pigovian tax. Our result under imperfect competition holds regardless of whether strategies are strategic substitutes or complements in contrast to direct entry regulation.

Suggested Citation

  • Matsumura, Toshihiro & Yamagishi, Atsushi, 2016. "Long-Run Welfare Effect of Energy Conservation Regulation," MPRA Paper 75626, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:75626
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    Cited by:

    1. Hirose, Kosuke & Matsumura, Toshihiro, 2023. "Green transformation in oligopoly markets under common ownership," Energy Economics, Elsevier, vol. 126(C).
    2. Sang-Ho Lee & Toshihiro Matsumura & Susumu Sato, 2018. "An analysis of entry-then-privatization model: welfare and policy implications," Journal of Economics, Springer, vol. 123(1), pages 71-88, January.
    3. Haraguchi, Junichi & Matsumura, Toshihiro, 2020. "Lack of commitment to future privatization policies may lead to worst welfare outcome," Economic Modelling, Elsevier, vol. 88(C), pages 181-187.
    4. Ino, Hiroaki & Matsumura, Toshihiro, 2019. "The equivalence of emission tax with tax-revenue refund and emission intensity regulation," Economics Letters, Elsevier, vol. 182(C), pages 126-128.
    5. Hirose, Kosuke & Ishihara, Akifumi & Matsumura, Toshihiro, 2021. "Tax versus Regulations: Robustness to Polluter Lobbying Against Near-Zero Emission Targets," MPRA Paper 108380, University Library of Munich, Germany.
    6. Ino, Hiroaki & Matsumura, Toshihiro, 2021. "Optimality of emission pricing policies based on emission intensity targets under imperfect competition," Energy Economics, Elsevier, vol. 98(C).
    7. Susumu Cato & Toshihiro Matsumura, 2019. "Entry License Tax: Stackelberg versus Cournot," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 175(2), pages 258-271.
    8. Rupayan Pal & Ruichao Song, 2019. "Externalities, entry bias and optimal subsidy policy in oligopoly," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2019-028, Indira Gandhi Institute of Development Research, Mumbai, India.
    9. Hirose, Kosuke & Matsumura, Toshihiro, 2018. "An Advantage of Emission Intensity Regulation for Emission Cap Regulation in a Near-Zero Emission Industry," MPRA Paper 90134, University Library of Munich, Germany.
    10. Toshihiro Matsumura & Atsushi Yamagishi, 2017. "Lobbying for Regulation Reform by Industry Leaders," Journal of Regulatory Economics, Springer, vol. 52(1), pages 63-76, August.
    11. Hirose, Kosuke & Matsumura, Toshihiro, 2022. "Common ownership and environmental Corporate Social Responsibility," Energy Economics, Elsevier, vol. 114(C).
    12. Junichi Haraguchi & Toshihiro Matsumura, 2021. "Profit‐enhancing entries in mixed oligopolies," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 33-55, July.
    13. Wang, Zheng-Xin & He, Ling-Yang & Li, Dan-Dan, 2019. "Assessment of the degree of order in the organisational structure of electricity regulatory institution in China based on shannon entropy," Energy Policy, Elsevier, vol. 132(C), pages 429-439.
    14. Hirose, Kosuke & Matsumura, Toshihiro, 2020. "A comparison between emission intensity and emission cap regulations," Energy Policy, Elsevier, vol. 137(C).
    15. Sato, Susumu, 2018. "Monopoly regulation in the presence of consumer demand-reduction," Economics Letters, Elsevier, vol. 173(C), pages 61-64.
    16. Zheng-Xin Wang & Dan-Dan Li & Hong-Hao Zheng, 2018. "The External Performance Appraisal of China Energy Regulation: An Empirical Study Using a TOPSIS Method Based on Entropy Weight and Mahalanobis Distance," IJERPH, MDPI, vol. 15(2), pages 1-18, January.
    17. Hirose, Kosuke & Matsumura, Toshihiro, 2017. "Emission Cap Commitment versus Emission Intensity Commitment as Self-Regulation," MPRA Paper 82564, University Library of Munich, Germany.
    18. Zhong Wang & Mingyu Wu & Shixiang Li & Changji Wang, 2021. "The Effect Evaluation of China’s Energy-Consuming Right Trading Policy: Empirical Analysis Based on PSM-DID," Sustainability, MDPI, vol. 13(21), pages 1-16, October.

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    More about this item

    Keywords

    energy-saving; environmental tax; free entry market; consumer-benefiting regulation;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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