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Alcoa re-Revisited: Recycling, Market Power and Environmental Policy

Author

Listed:
  • Jean De Beir
  • Guillaume Girmens

Abstract

This article incorporates an environmental dimension into the study of markets characterised by producers of a primary good in a position of market power over a sector of recycling. In the model used, production of the primary good by a monopolistic firm is polluting, whereas production of the recycled good is not. Taxing the monopolistic firm allows to reduce pollution, at the price of a reduction in the total quantity of good produced. The effect of a subsidy for recycling depends on the slopes of the demand curve and of the recycler's supply curve. It is ambiguous in terms of welfare, but it always encourages recycling.

Suggested Citation

  • Jean De Beir & Guillaume Girmens, 2009. "Alcoa re-Revisited: Recycling, Market Power and Environmental Policy," Economie Internationale, CEPII research center, issue 120, pages 37-52.
    • Handle: RePEc:cii:cepiei:2009-4tb
    as

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    File URL: http://www.cepii.fr/IE/rev120/ei120b.htm
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    Citations

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    Cited by:

    1. Bocar Samba Ba, 2016. "Phosphorus conservation, eutrophication reduction and social welfare improvement: taxation of extracted phosphorus or subsidy of recycled phosphorus ?," Post-Print hal-02801273, HAL.
    2. Bocar Samba BA, 2017. "Recycling of a Primary Resource and Market Power: The Alcoa Case," Working Papers 2017.27, FAERE - French Association of Environmental and Resource Economists.

    More about this item

    Keywords

    Recycling; market power; environmental externalities; environmental policy;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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