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The Pigouvian Tax Rule in the Presence of an Eco-Industry

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  • Alain-Désiré Nimubona
  • Bernard Sinclair-Desgagné

Abstract

Pollution abatement goods and services are now largely being delivered by a specialized "eco-industry."" This note reconsiders Pigouvian taxes in this context. We find that the optimal emission tax will depart from the marginal social cost of pollution according to the polluters' and the environment firms' relative market power." La production des biens et services destinés à reduire la pollution incombe actuellement souvent à des firmes spécialisées qui forment ce que l'on appelle maintenant l'« éco-industrie ». Cette note reconsidère les taxes pigouviennes dans ce contexte. Il est démontré que la taxe optimale sur les émissions polluantes divergera du coût social marginal de la pollution selon les pouvoirs de marché relatifs des pollueurs et des entreprises environnementales.

Suggested Citation

  • Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2005. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," CIRANO Working Papers 2005s-21, CIRANO.
    • Handle: RePEc:cir:cirwor:2005s-21
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    References listed on IDEAS

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    1. Y.H. Farzin & P.M. Kort, 2000. "Pollution Abatement Investment When Environmental Regulation Is Uncertain," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(2), pages 183-212, April.
    2. Ngo Van Long & Antoine Soubeyran & Ngo Van Long & Antoine Soubeyran, 1999. "Pollution, Pigouvian taxes and asymmetric international oligopoly," Chapters, in: Emmanuel Petrakis & Eftichios S. Sartzetakis & Anastasios Xepapadeas (ed.), Environmental Regulation and Market Power, chapter 9, pages 175-194, Edward Elgar Publishing.
    3. Maia David & Bernard Sinclair-Desgagné, 2005. "Environmental Regulation and the Eco-Industry," Journal of Regulatory Economics, Springer, vol. 28(2), pages 141-155, September.
    4. Barnett, A H, 1980. "The Pigouvian Tax Rule under Monopoly," American Economic Review, American Economic Association, vol. 70(5), pages 1037-1041, December.
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    6. Buchanan, James M, 1969. "External Diseconomies, Corrective Taxes, and Market Structure," American Economic Review, American Economic Association, vol. 59(1), pages 174-177, March.
    7. Katsoulacos, Yannis & Xepapadeas, Anastasios, 1994. "Environmental Policy Under Oligopoly with Endogenous Market Structure," CEPR Discussion Papers 955, C.E.P.R. Discussion Papers.
    8. repec:bla:scandj:v:97:y:1995:i:3:p:411-20 is not listed on IDEAS
    9. Stephen Smith, 1992. "Taxation and the environment: a survey," Fiscal Studies, Institute for Fiscal Studies, vol. 13(4), pages 21-57, January.
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    Citations

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    Cited by:

    1. Alain-Désiré Nimubona, 2010. "Pollution Policy and Liberalization of Trade in Environmental Goods," Working Papers 1004, University of Waterloo, Department of Economics, revised May 2010.
    2. Sonia Schwartz & Hubert Stahn, 2014. "Competitive Permit Markets and Vertical Structures: The Relevance of Imperfectly Competitive Eco-Industries," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(1), pages 69-95, February.
    3. Joan Canton & Antoine Soubeyran & Hubert Stahn, 2008. "Environmental Taxation and Vertical Cournot Oligopolies: How Eco-industries Matter," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(3), pages 369-382, July.
    4. Maia David & Bernard Sinclair-Desgagné, 2005. "Environmental Regulation and the Eco-Industry," Journal of Regulatory Economics, Springer, vol. 28(2), pages 141-155, September.
    5. Canton, Joan & David, Maia & Sinclair-Desgagné, Bernard, 2012. "Environmental Regulation and Horizontal Mergers in the Eco-industry," Strategic Behavior and the Environment, now publishers, vol. 2(2), pages 107-132, July.
    6. Damien Sans & Sonia Schwartz & Hubert Stahn, 2014. "About Polluting Eco-Industries: Optimal Provision of Abatement Goods and Pigouvian Fees," Working Papers halshs-01083464, HAL.
    7. Joan Canton & Maia David & Bernard Sinclair-Desgagné, 2007. "Environmental regulation and mergers within the eco-industry," Working Papers 2007/01, INRA, Economie Publique.
    8. Canton, Joan, 2008. "Redealing the cards: How an eco-industry modifies the political economy of environmental taxes," Resource and Energy Economics, Elsevier, vol. 30(3), pages 295-315, August.
    9. Idrissa Sibailly, 2013. "On the Pigouvian Tax Rule in an Open Economy: Opening the Gate to the Eco-industry," Working Papers hal-00911464, HAL.
    10. Maia David & Bernard Sinclair-Desgagné, 2006. "Revisiting the Environmental Subsidy in the Presence of an Eco-Industry," Working Papers 2006/04, INRA, Economie Publique.
    11. David, Maia & Nimubona, Alain-Désiré & Sinclair-Desgagné, Bernard, 2011. "Emission taxes and the market for abatement goods and services," Resource and Energy Economics, Elsevier, vol. 33(1), pages 179-191, January.
    12. Abdul Baki, Ghina & Marrouch, Walid, 2022. "Environmental taxation in the Bertrand differentiated duopoly: New insights," Resource and Energy Economics, Elsevier, vol. 70(C).
    13. Bocar Samba Ba, 2016. "Phosphorus conservation, eutrophication reduction and social welfare improvement: taxation of extracted phosphorus or subsidy of recycled phosphorus ?," Post-Print hal-02801273, HAL.
    14. Idrissa G.-O. Sibailly, 2015. "On the pigouvian tax rule in an open economy: the case of abatement technology trade," Economics Bulletin, AccessEcon, vol. 35(4), pages 2733-2741.
    15. Joan Canton, 2007. "Redealing the Cards: How the Presence of an Eco-Industry Modifies the Political Economy of Environmental Policies," Working Papers 2007.25, Fondazione Eni Enrico Mattei.
    16. Canton, Joan, 2007. "Redealing the Cards: How The Presence of an Eco-Industry Modifies the Political Economy of Environmental Policies," Economic Theory and Applications Working Papers 10271, Fondazione Eni Enrico Mattei (FEEM).
    17. Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2011. "Polluters and Abaters," Annals of Economics and Statistics, GENES, issue 103-104, pages 9-24.
    18. Alain-Désiré Nimubona, 2012. "Pollution Policy and Trade Liberalization of Environmental Goods," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(3), pages 323-346, November.
    19. Damien Sans, 2015. "Optimal Taxation Rule Reversal in the Presence of Gentle Polluters and Greedy Cleaners," Working Papers halshs-01247190, HAL.
    20. Maia David & Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2007. "Environmental Taxation and the Structure of the Eco-industry," Working Papers 2007/02, INRA, Economie Publique.
    21. Joan Canton, 2007. "Environmental Taxation and International Eco-Industries," Working Papers 2007.26, Fondazione Eni Enrico Mattei.
    22. Xinming Du, 2023. "Symptom or Culprit? Social Media, Air Pollution, and Violence," CESifo Working Paper Series 10296, CESifo.
    23. Alain-Désiré Nimubona & Hassan Benchekroun, 2014. "Environmental R&D in the Presence of an Eco-Industry," Working Papers 1406, University of Waterloo, Department of Economics, revised Sep 2014.
    24. Canton, Joan, 2007. "Environmental Taxation and International Eco-Industries," Economic Theory and Applications Working Papers 10274, Fondazione Eni Enrico Mattei (FEEM).

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    More about this item

    Keywords

    Pigouvian taxes; environment industry; taxes pigouviennes; industries de l'environnement;
    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

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