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The timing of environmental policy in a duopolistic market

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  • Moner-Colonques, R.
  • Rubio, S.

Abstract

In this paper the strategic use of innovation by two polluting firms to influence environmental policy is evaluated. The analysis is carried out by comparing two alternative policy regimes for two policy instruments: Taxes and standards. The first of the regimes assumes that the regulator commits to an ex-ante level of the policy instrument. In the second one, there is no commitment. The results show that when there is no commitment and a tax is used to control emissions, the strategic behavior of firms can be welfare improving if the efficiency of the clean technology is relatively low. If this is not the case, the strategic behavior of the duopolists has a detrimental effect on welfare regardless of the policy instrument used to control emissions.

Suggested Citation

  • Moner-Colonques, R. & Rubio, S., 2015. "The timing of environmental policy in a duopolistic market," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 15(01).
    • Handle: RePEc:ags:earnsa:211279
    DOI: 10.22004/ag.econ.211279
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    References listed on IDEAS

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    3. Buccella, Domenico & Fanti, Luciano & Gori, Luca, 2021. "To abate, or not to abate? A strategic approach on green production in Cournot and Bertrand duopolies," Energy Economics, Elsevier, vol. 96(C).
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    5. Leal, Mariel & Garcia, Arturo & Lee, Sang-Ho, 2018. "The Timing Of Environmental Tax Policy With A Consumer-Friendly Firm," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 59(1), pages 25-43, June.
    6. Marie-Laure Cabon-Dhersin & Natacha Raffin, 2024. "Cooperation in green R &D and environmental policies: tax or standard," Journal of Regulatory Economics, Springer, vol. 66(2), pages 205-237, December.
    7. Wang, Xu & Zhang, Xiao-Bing & Zhu, Lei, 2019. "Imperfect market, emissions trading scheme, and technology adoption: A case study of an energy-intensive sector," Energy Economics, Elsevier, vol. 81(C), pages 142-158.
    8. Hao Xu & Ming Luo, 2022. "Optimal Environmental Policy in a Dynamic Transboundary Pollution Game: Emission Standards, Taxes, and Permit Trading," Sustainability, MDPI, vol. 14(15), pages 1-25, July.
    9. Lili Xu & Fanrui Su & Sang-Ho Lee, 2023. "Strategic corporate social responsibility and partial privatization policy with foreign penetration," The Japanese Economic Review, Springer, vol. 74(2), pages 251-278, April.
    10. Lee, Sang-Ho & Muminov, Timur & Chen, Jiaqi, 2019. "Timing of R&D Decisions and Output Subsidies in a Mixed Duopoly with Spillovers," MPRA Paper 91452, University Library of Munich, Germany.

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