IDEAS home Printed from https://ideas.repec.org/a/eee/jeeman/v130y2025ics0095069625000142.html
   My bibliography  Save this article

Markup dispersion, industry coverage and the cost of environmental regulation

Author

Listed:
  • Li, Haoyang
  • Wu, Nan
  • Zhao, Jinhua

Abstract

The environmental economics literature has long established that all polluters should be regulated to equalize their marginal abatement costs. We make the case for “partial coverage” where only a subset of polluting industries is regulated. Environmental regulation, by moving factors of production from dirtier to cleaner industries, ameliorates the costs of imperfect competition if the cleaner industries also have higher markups. The selection of industries to be regulated depends on the correlation between industry markups and dirtiness, and may not be those with the highest emissions. Partial coverage may dominate full coverage when the abatement target is moderate. We apply the model to environmental regulation in China and show that significant cost savings can be achieved by switching from full to partial coverage.

Suggested Citation

  • Li, Haoyang & Wu, Nan & Zhao, Jinhua, 2025. "Markup dispersion, industry coverage and the cost of environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 130(C).
    • Handle: RePEc:eee:jeeman:v:130:y:2025:i:c:s0095069625000142
    DOI: 10.1016/j.jeem.2025.103130
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0095069625000142
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jeem.2025.103130?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Partial coverage; Markup dispersion; Emission intensity; Cost-effectiveness;
    All these keywords.

    JEL classification:

    • 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
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    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:eee:jeeman:v:130:y:2025:i:c:s0095069625000142. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622870 .

    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.