IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-08r00006.html
   My bibliography  Save this article

Pollution Taxes and Location Decision under Free Entry Oligopoly

Author

Listed:
  • Hsin-I Fan

    (Yu Da College of Business and National Yunlin University)

  • Yeung-Nan Shieh

    (San Jose State University)

Abstract

This paper examines the impact of a pollution tax as a pollution control device on the output and location decisions of undifferentiated oligopolistic firms with free entry. It shows that the optimum output and location of an oligopolistic firm is independent of a change in the pollution tax if the demand function is linear. Furthermore, an increase in the pollution tax will increase (decrease) output and move the plant location toward (away from) the CBD if the demand function is concave (convex). It also shows that a higher pollution tax will increase the pollution damage if the demand function is linear and the location effect dominates the demand effect. These results are significantly different from the conventional results based on the monopolistic location model. It indicates that the demand condition plays an important role in the determination of the impact of a pollution tax on the location decision of an oligopolistic firm and the pollution damage to the CBD residents.

Suggested Citation

  • Hsin-I Fan & Yeung-Nan Shieh, 2009. "Pollution Taxes and Location Decision under Free Entry Oligopoly," Economics Bulletin, AccessEcon, vol. 29(1), pages 244-252.
    • Handle: RePEc:ebl:ecbull:eb-08r00006
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I1-P26.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Forster, Bruce A., 1988. "Spatial economic theory of pollution control: Reflections on a paradox," Journal of Environmental Economics and Management, Elsevier, vol. 15(4), pages 470-474, December.
    2. Mathur, Vijay K., 1976. "Spatial economic theory of pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 3(1), pages 16-28, June.
    3. Thomas H. Tietenberg, 1973. "Specific Taxes and the Control of Pollution: A General Equilibrium Analysis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(4), pages 503-522.
    4. Mai, Chao-cheng & Hwang, Hong, 1992. "Production-location decision and free entry oligopoly," Journal of Urban Economics, Elsevier, vol. 31(2), pages 252-271, March.
    5. Hong Hwang & Chao-Cheng Mai, 2004. "The Effects of Pollution Taxes on Urban Areas with an Endogenous Plant Location," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(1), pages 57-65, September.
    6. Hanoch, Giora, 1975. "The Elasticity of Scale and the Shape of Average Costs," American Economic Review, American Economic Association, vol. 65(3), pages 492-497, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hong Hwang & Chao-Cheng Mai, 2004. "The Effects of Pollution Taxes on Urban Areas with an Endogenous Plant Location," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(1), pages 57-65, September.
    2. Yeung-Nan Shieh, 2013. "Effects of ad-valorem taxes on location decision under free entry Cournot oligopoly," Economics and Business Letters, Oviedo University Press, vol. 2(1), pages 5-12.
    3. Biing-Shiunn Yang & Chao-Cheng Mai, 2013. "The impact of uncertain environmental regulatory policy on optimal plant location and anti-pollution technology selection," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(3), pages 753-769, June.
    4. Estay, Manuel & Stranlund, John K., 2022. "Entry, location, and optimal environmental policies," Resource and Energy Economics, Elsevier, vol. 70(C).
    5. Ming-chieh Chen & Yeung-nan Shieh, 2009. "The effects of specific commodity taxes on output and location of free entry oligopoly," Economics Bulletin, AccessEcon, vol. 29(4), pages 3104-3111.
    6. Lin-Ti Tan, 2005. "Spatial Economic Theory of Pollution Control under Stochastic Emissions," IEAS Working Paper : academic research 05-A009, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    7. Ming Chen & Yeung-Nan Shieh, 2011. "Specific commodity taxes, output and location decision under free entry oligopoly," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 47(1), pages 25-36, August.
    8. Tung Liu & Kui-Wai Li, 2008. "Revisiting Solow’s Decomposition of Economic and Productivity Growth," Working Papers 200805, Ball State University, Department of Economics, revised Dec 2008.
    9. Tung Liu, 2020. "Measuring Technical, Allocative inefficiency, and Cost Inefficiency by Applying Duality Theory," Working Papers 202001, Ball State University, Department of Economics, revised Jun 2020.
    10. Tsionas, Mike G., 2020. "Quantile Stochastic Frontiers," European Journal of Operational Research, Elsevier, vol. 282(3), pages 1177-1184.
    11. Bitros, G.C. & Panas, E.J., 1999. "Another Look at the Inflation-Productivity Trade-Off," Athens University of Economics and Business 114, Athens University of Economics and Business, Department of International and European Economic Studies.
    12. Hwang, Hong & Mai, Chao-Cheng & Shieh, Yeung-Nan, 1998. "Equilibrium production-location decisions under duopoly," Regional Science and Urban Economics, Elsevier, vol. 28(1), pages 123-133, January.
    13. Leonidas Milios, 2021. "Towards a Circular Economy Taxation Framework: Expectations and Challenges of Implementation," Circular Economy and Sustainability, Springer, vol. 1(2), pages 477-498, September.
    14. Wall, Charles A. & Fisher, Brian S., 1988. "Supply Response and the Theory of Production and Profit Functions," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 56(03), pages 1-22, December.
    15. Richard Nehring & Jorge Fernandez-Cornejo & David Banker, 2005. "Off-farm labour and the structure of US agriculture: the case of corn/soybean farms," Applied Economics, Taylor & Francis Journals, vol. 37(6), pages 633-649.
    16. Philippe Gagnepain, 1998. "Structures productives de l'industrie du transport urbain et effets des schémas réglementaires," Économie et Prévision, Programme National Persée, vol. 135(4), pages 95-107.
    17. M. Ishaq Nadiri & Mark Schankerman, 1980. "Variable Cost Functions and the Rate of Return to Quasi-Fixed Factors: An Application to R and D in the Bell System," NBER Working Papers 0597, National Bureau of Economic Research, Inc.
    18. Bernstein, David H. & Parmeter, Christopher F., 2019. "Returns to scale in electricity generation: Replicated and revisited," Energy Economics, Elsevier, vol. 82(C), pages 4-15.
    19. Jacob A. Bikker, 2017. "Performance of the life insurance industry under pressure: efficiency, competition and consolidation," Chapters, in: Jacob A. Bikker & Laura Spierdijk (ed.), Handbook of Competition in Banking and Finance, chapter 9, pages 152-182, Edward Elgar Publishing.
    20. Vlastuin, Chris & Lawrence, Denis & Quiggin, John C., 1982. "Size Economies in Australian Agriculture," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 50(01), pages 1-24, April.

    More about this item

    JEL classification:

    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-08r00006. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.