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Multilateral and unilateral policy reform of emission taxes and abatement subsidies in a two-country model with oligopolistic interdependence

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  • Luis Gautier

Abstract

This paper considers a two-country model with oligopolistic interdependence where firms make their output and emission decisions simultaneously, and face an emission tax and abatement subsidy. The impact of multilateral and unilateral policy reform on global emissions and welfare is examined, and the impact of the degree of product differentiation on optimal policy is explored. The analysis indicates that multilateral/unilateral policy reform reduces emissions and raises welfare under alternative assumptions on the cost function and parameter values. Additionally, it is shown that optimal policy is sensitive to the degree of product differentiation. Copyright Springer 2013

Suggested Citation

  • Luis Gautier, 2013. "Multilateral and unilateral policy reform of emission taxes and abatement subsidies in a two-country model with oligopolistic interdependence," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(1), pages 59-71, January.
    • Handle: RePEc:spr:envpol:v:15:y:2013:i:1:p:59-71
    DOI: 10.1007/s10018-012-0039-1
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    References listed on IDEAS

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    1. Conrad, Klaus & Wang, Jianmin, 1993. "The effect of emission taxes and abatement subsidies on market structure," International Journal of Industrial Organization, Elsevier, vol. 11(4), pages 499-518.
    2. Newell, Richard & Anderson, Soren, 2003. "Prospects for Carbon Capture and Storage Technologies," RFF Working Paper Series dp-02-68, Resources for the Future.
    3. Poyago-Theotoky, Joanna & Teerasuwannajak, Khemarat, 2002. "The Timing of Environmental Policy: A Note on the Role of Product Differentiation," Journal of Regulatory Economics, Springer, vol. 21(3), pages 305-316, May.
    4. Hoel, Michael, 1991. "Global environmental problems: The effects of unilateral actions taken by one country," Journal of Environmental Economics and Management, Elsevier, vol. 20(1), pages 55-70, January.
    5. Fujiwara, Kenji, 2009. "Environmental policies in a differentiated oligopoly revisited," Resource and Energy Economics, Elsevier, vol. 31(3), pages 239-247, August.
    6. Sajal Lahiri & George Symeonidis, 2007. "Piecemeal Multilateral Environmental Policy Reforms under Asymmetric Oligopoly," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(5), pages 885-899, October.
    7. Panos Hatzipanayotou & Sajal Lahiri & Michael S. Michael, 2005. "Reforms of Environmental Policies in the Presence of Cross‐border Pollution and Public–Private Clean‐up," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(2), pages 315-333, June.
    8. Arja H. Turunen‐Red & Alan D. Woodland, 2004. "Multilateral Reforms of Trade and Environmental Policy," Review of International Economics, Wiley Blackwell, vol. 12(3), pages 321-336, August.
    9. repec:bla:scandj:v:97:y:1995:i:3:p:411-20 is not listed on IDEAS
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    Cited by:

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    2. Luis Gautier, 2017. "Local content and emission taxes when the number of foreign firms is endogenous," Journal of Economics, Springer, vol. 122(3), pages 239-266, November.

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    More about this item

    Keywords

    Environmental subsidies; Multilateral policy; Horizontal product differentiation; H23; L13; Q58;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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