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Environmental regulation and mergers within the eco-industry

Author

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  • Joan Canton
  • Maia David
  • Bernard Sinclair-Desgagné

Abstract

The welfare implications of a merger in an environment industry (i.e. the industry that supplies abatement goods and services) are considered in a Cournot-Nash context. The traditional analysis of mergers is extended in two ways. First, we examine how the environmental policy may affect the incentives to merge in this specific sector. Second, we show that mergers in the environment industry impact welfare beyond what is observed in other sectors due to an extra effect on the environment. This could result in a conflict between an anti-trust agency, whose mandate is to focus on consumers' and firms' surplus, and a benevolent regulator considering the overall welfare.

Suggested Citation

  • Joan Canton & Maia David & Bernard Sinclair-Desgagné, 2007. "Environmental regulation and mergers within the eco-industry," Working Papers 2007/01, INRA, Economie Publique.
    • Handle: RePEc:apu:wpaper:2007/01
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    References listed on IDEAS

    as
    1. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-126, March.
    2. Eberhard Feess & Gerd Muehlheusser, 2002. "Strategic Environmental Policy, Clean Technologies and the Learning Curve," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(2), pages 149-166, October.
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    5. Maia David & Bernard Sinclair-Desgagné, 2005. "Environmental Regulation and the Eco-Industry," Journal of Regulatory Economics, Springer, vol. 28(2), pages 141-155, September.
    6. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 185-199.
    7. Joan Canton, 2007. "Environmental Taxation and International Eco-Industries," Working Papers 2007.26, Fondazione Eni Enrico Mattei.
    8. Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2013. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," Economics Bulletin, AccessEcon, vol. 33(1), pages 747-752.
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    More about this item

    Keywords

    Eco-industry; Environmental tax; Horizontal mergers;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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