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Mergers, pollution and environmental policy

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  • Indrani, Roy Chowdhury

Abstract

We examine the impact of abatement taxes on the pollution level in a duopoly framework with endogenous market structure. We demonstrate that an increase in abatement taxes could trigger a regime-switch from Cournot competition to merger, as well as from merger to Cournot competition. The nature of this switch is critically dependent on the nature of merger costs. However, in either case, this may cause the pollution level to increase.

Suggested Citation

  • Indrani, Roy Chowdhury, 2006. "Mergers, pollution and environmental policy," MPRA Paper 7900, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:7900
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    References listed on IDEAS

    as
    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.
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    More about this item

    Keywords

    Mergers; pollution; abatement tax; endogenous market structure;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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