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The Impact of Foreign Emission Tax on Domestic Merger Profitability

In: Handbook of Merger Control and Environmental Policy

Author

Listed:
  • Luis Gautier

    (Universidad de Málaga, Departamento de Teoría e Historia Econòmica)

  • Mahelet G. Fikru

    (Missouri University of Science and Technology)

Abstract

This chapter considers a two-country model with oligopolistic interdependence to examine merger incentives arising from environmental policy changes. We consider changes in the emission tax in a foreign country and study how this affects the profitability of a merger in a home country. Results suggest that the effects on merger profitability depend on pollution intensity ratios in the foreign country which is a technology parameter and market power ratios in the home country which is a market structure parameter. Our analysis is relevant to study the effects of environmental policy on merger incentives in a global context.

Suggested Citation

  • Luis Gautier & Mahelet G. Fikru, 2024. "The Impact of Foreign Emission Tax on Domestic Merger Profitability," Natural Resource Management and Policy, in: Handbook of Merger Control and Environmental Policy, chapter 0, pages 47-62, Springer.
    • Handle: RePEc:spr:nrmchp:978-3-031-63549-6_3
    DOI: 10.1007/978-3-031-63549-6_3
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