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Ecological Dumping under Monopolistic Competition

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  • Michael Pfluger

Abstract

The competitive choice of emission taxes by two governments is analysed in a model of monopolostic competition with capital mobility where pollution externalities are regional. Assuming that governments have no other policy instrument apart from emission taxes at their disposal, I show that governments choose inefficiently low (high) taxes if the importance of emissions in production is small (large) relative to transport costs and the mark‐up. In contrast to the previous literature, the marginal disutility of pollution is not among the parameters which separate the non‐cooperative choice of emission taxes from the social planner's choice. JEL classification: F1; H7; Q2

Suggested Citation

  • Michael Pfluger, 2001. "Ecological Dumping under Monopolistic Competition," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 689-706, December.
    • Handle: RePEc:bla:scandj:v:103:y:2001:i:4:p:689-706
    DOI: 10.1111/1467-9442.00266
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    Citations

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    Cited by:

    1. Jota Ishikawa & Toshihiro Okubo, 2008. "Greenhouse-gas Emission Controls and International Carbon Leakage through Trade Liberalization," Global COE Hi-Stat Discussion Paper Series gd08-013, Institute of Economic Research, Hitotsubashi University.
    2. Forslid, Rikard & Okubo, Toshihiro & Sanctuary, Mark, 2013. "Trade, Transboundary Pollution and Market Size," CEPR Discussion Papers 9412, C.E.P.R. Discussion Papers.
    3. Haufler, Andreas & Pflüger, Michael, 2003. "Market structure and the taxation of international trade," Discussion Papers in Economics 106, University of Munich, Department of Economics.
    4. Andreas Haufler & Michael Pflüger, 2004. "International Commodity Taxation under Monopolistic Competition," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(3), pages 445-470, August.
    5. Wataru Johdo, 2009. "New Entry, International Location Patterns and Welfare," American Journal of Economics and Business Administration, Science Publications, vol. 1(2), pages 133-137, June.
    6. Richard Nahuis & Paul Tang, 2005. "Environmental policy competition and differential tax treatment; a case for tighter coordination?," CPB Discussion Paper 50, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Cheng Haitao & Kato Hayato & Obashi Ayako, 2021. "Is Environmental Tax Harmonization Desirable in Global Value Chains?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(1), pages 379-416, January.
    8. Andrea Podhorsky, 2020. "Environmental certification programs: How does information provision compare with taxation?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(6), pages 1772-1800, December.
    9. Rikard Forslid & Toshihiro Okubo & Mark Sanctuary, 2017. "Trade Liberalization, Transboundary Pollution, and Market Size," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(3), pages 927-957.
    10. Cheng, Haitao, 2024. "Domestic versus international emissions trading with capital mobility," Resource and Energy Economics, Elsevier, vol. 77(C).
    11. Lai, Yu-Bong, 2019. "Environmental policy competition and heterogeneous capital endowments," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 107-119.
    12. Fabio Grazi (AFD) & Henri WAISMAN & Jeroen van DEN BERGH, 2017. "A Simple Model of Agglomeration Economies with Environmental Externalities," Working Paper 6123ba60-086f-4618-9df3-a, Agence française de développement.
    13. van 't Veld, Klaas & Shogren, Jason F., 2012. "Environmental federalism and environmental liability," Journal of Environmental Economics and Management, Elsevier, vol. 63(1), pages 105-119.
    14. Yasunori Ishii, 2017. "Dumping in a product differentiated reciprocal trade industry emitting global pollution," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 26(2), pages 195-208, February.
    15. Richard Nahuis & Paul Tang, 2005. "Environmental policy competition and differential tax treatment; a case for tighter coordination?," CPB Discussion Paper 50.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    16. Qianqian Shao & Thorsten Janus & Maarten J. Punt & Justus Wesseler, 2018. "The Conservation Effects of Trade with Imperfect Competition and Biased Policymakers," Agriculture, MDPI, vol. 8(7), pages 1-22, July.
    17. Yu-Bong Lai, 2019. "The impacts of firms’ mobility on the environmental policy," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 21(3), pages 349-369, July.
    18. Michael Benarroch & James Gaisford, 2014. "Intra-industry Trade Liberalization and the Environment," Review of International Economics, Wiley Blackwell, vol. 22(5), pages 886-904, November.

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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