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Firm Preferences for Environmental Regulation

Author

Listed:
  • Félix Muñoz-García

    (School of Economic Sciences,Washington State University)

  • Sherzod B. Akhundjanov

    (School of Economic Sciences,Washington State University)

Abstract

This paper summarizes the findings of two papers that examine the effect of environmental regulation on the production decisions and profits of polluting and green firms. Using a game-theoretic framework, we find conditions under which the green firm favors regulation (a standard finding), but also derive conditions for the opposite –and more surprising– scenario, whereby the green firm opposes environmental regulation, while the brown firm favors it. We also show that similar preference reversals can occur towards uniform and fine-tuned regulation. Our study highlights the role that firm heterogeneity plays in determining firm preferences towards environmental regulation.

Suggested Citation

  • Félix Muñoz-García & Sherzod B. Akhundjanov, 2014. "Firm Preferences for Environmental Regulation," Review of Environment, Energy and Economics - Re3, Fondazione Eni Enrico Mattei, November.
    • Handle: RePEc:fem:femre3:2014.11-04
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    File URL: http://re3.feem.it/getpage.aspx?id=6972
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    Citations

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    Cited by:

    1. Muñoz-García Félix & Akhundjanov Sherzod B., 2016. "Can Polluting Firms Favor Regulation?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(4), pages 1-23, October.

    More about this item

    Keywords

    Cost asymmetry; Cost disadvantage; Emission fees; Green firms;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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