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Taxes versus standards under cross-ownership

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  • Bárcena-Ruiz, Juan Carlos
  • Campo, María Luz

Abstract

This paper analyzes the effect of passive investment in rival firms on the setting of uniform taxes and uniform absolute emission standards by the government. When firms are equal and there is no cross-ownership, standards and taxes are equivalent and generate the same social welfare. However, under cross-ownership that result does not hold since cross-ownership reduces market competition, which has a different effect on taxes and standards. In general, we find that when cross-ownership is low social welfare is greater with a tax, and when it is high social welfare is greater with a standard.

Suggested Citation

  • Bárcena-Ruiz, Juan Carlos & Campo, María Luz, 2017. "Taxes versus standards under cross-ownership," Resource and Energy Economics, Elsevier, vol. 50(C), pages 36-50.
    • Handle: RePEc:eee:resene:v:50:y:2017:i:c:p:36-50
    DOI: 10.1016/j.reseneeco.2017.06.006
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    References listed on IDEAS

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    Cited by:

    1. Lili Xu & Yidan Zhang & Sang‐Ho Lee, 2024. "Effects of partial passive ownership in a successive endogenous timing game with R&D spillovers," Bulletin of Economic Research, Wiley Blackwell, vol. 76(1), pages 283-297, January.
    2. Juan Carlos Bárcena‐Ruiz & María Begoña Garzón, 2022. "Environmental policy instruments and ownership of firms," Manchester School, University of Manchester, vol. 90(4), pages 385-408, July.
    3. Bárcena-Ruiz, Juan Carlos & Sagasta, Amagoia, 2022. "International trade and environmental corporate social responsibility," Energy Economics, Elsevier, vol. 115(C).
    4. Juan Carlos Bárcena‐Ruiz & María Luz Campo, 2020. "Vertical integration and first‐mover advantages in environmental taxes," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(6), pages 1033-1039, September.
    5. Bárcena-Ruiz, Juan Carlos & Sagasta, Amagoia, 2021. "Environmental policies with consumer-friendly firms and cross-ownership," Economic Modelling, Elsevier, vol. 103(C).
    6. Dong, Quan & Chang, Yang-Ming, 2020. "Emission taxes vs. environmental standards under partial ownership arrangements," Research in Economics, Elsevier, vol. 74(3), pages 250-262.
    7. Shi, Yuan & Wang, Xinhua & Gao, Hongwei, 2021. "Profit formulation and equilibrium strategy of firms with cross-shareholding," Finance Research Letters, Elsevier, vol. 38(C).

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    More about this item

    Keywords

    Q58; L13; H2; Environmental Tax; Environmental Standard; Cross-Ownership; Imperfect Competition;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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