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Effects of Mixed Oligopoly and Emission Taxes on the Market and Environment

Author

Listed:
  • Woohyung Lee

    (Keimyung University)

  • Tohru Naito

    (Doshisha University)

  • Ki-Dong Lee

    (Keimyung University)

Abstract

The literature has mainly focused on the optimal emission tax rate to internalize the negative externalities of pollutants. Thus, we investigate firms’ technology adoption behavior under an emission taxation system. We also examine the possibility of using a elfare-maximizing public firm with eco-friendly production technology to reduce environmental damage. Private firms can choose clean or normal technology for their production process. The analysis indicates several main results. First, under the emission taxation system, private firms adopt clean technologies even though they bear additional abatement costs in the production process if environmental damage caused by their production process is large. Second, mixed oligopoly is socially desirable when environmental damage is low. Thus, private firms take normal technology. Finally, when private firms adopt clean technology, mixed oligopoly is better than emission taxes if environmental damage is low and if the market is less competitive from a social welfare perspective.

Suggested Citation

  • Woohyung Lee & Tohru Naito & Ki-Dong Lee, 2017. "Effects of Mixed Oligopoly and Emission Taxes on the Market and Environment," Korean Economic Review, Korean Economic Association, vol. 33, pages 267-294.
    • Handle: RePEc:kea:keappr:ker-20171231-33-2-03
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    References listed on IDEAS

    as
    1. Lee, Ki-Dong, 2007. "Equilibrium Environmental Taxes on Intermediate-Good Production When Markets are Vertically Related in Open Economies," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 48(1), pages 113-135, June.
    2. Fujiwara, Kenji, 2009. "Environmental policies in a differentiated oligopoly revisited," Resource and Energy Economics, Elsevier, vol. 31(3), pages 239-247, August.
    3. Bruce A. Blonigen & Yuka Ohno, 2019. "Endogenous Protection, Foreign Direct Investment and Protection-building Trade," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 6, pages 205-233, World Scientific Publishing Co. Pte. Ltd..
    4. Xu, Lili & Cho, Sumi & Lee, Sang-Ho, 2016. "Emission tax and optimal privatization in Cournot–Bertrand comparison," Economic Modelling, Elsevier, vol. 55(C), pages 73-82.
    5. Holland, Stephen P., 2012. "Emissions taxes versus intensity standards: Second-best environmental policies with incomplete regulation," Journal of Environmental Economics and Management, Elsevier, vol. 63(3), pages 375-387.
    6. Rupayan Pal, 2012. "Delegation And Emission Tax In A Differentiated Oligopoly," Manchester School, University of Manchester, vol. 80(6), pages 650-670, December.
    7. Hideo Konishi & Kamal Saggi & Shlomo Weber, 2023. "Endogenous trade policy under foreign direct investment," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 23, pages 523-542, World Scientific Publishing Co. Pte. Ltd..
    8. Tohru Naito & Hikaru Ogawa, 2009. "Direct versus indirect environmental regulation in a partially privatized mixed duopoly," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 10(2), pages 87-100, June.
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    Cited by:

    1. Teodor Hada & Iulia Iuga & Dorin Wainberg, 2020. "Some Aspects Regarding the Financing of the Environment Fund in Romania," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 954-961, August.
    2. Sung-Hoon Park & Chad Settle, 2022. "Internalizing environmental damages and endogenous reimbursement in environmental conflicts: a game-theoretic analysis," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 69(4), pages 547-569, December.

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    More about this item

    Keywords

    Emission Tax; Mixed Oligopoly; Environmental Damage; Pollution Abatement;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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