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Price Discrimination Based on Downstream Regulation: Evidence from the Market for SO2 Scrubbers

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  • Grischa Perino

    (University of East Anglia)

Abstract

Evidence from the market for flue-gas desulfurization devices [scrubbers] in the U.S. is used to show that the choice and stringency of environmental regulation have substantial effects on the mark-up of an abatement technology. The imperfectly competitive upstream eco-industry charges higher prices for scrubbers to power plants participating in Phase I of the tradable permit scheme for sulphur dioxide than to those subject to emission standards. The mark-up also depends on stringency of the emission standard, geographic location and electricity market regulation. Previous empirical studies neglect this source of endogeneity. Market power and price discrimination have repercussions on the rate of diffusion and innovation incentives.

Suggested Citation

  • Grischa Perino, 2010. "Price Discrimination Based on Downstream Regulation: Evidence from the Market for SO2 Scrubbers," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2010-09, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    • Handle: RePEc:uea:ueaccp:2010_09
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    References listed on IDEAS

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    Cited by:

    1. Allen Bellas & Duane Finney & Ian Lange, 2013. "Technological Advance in Cooling Systems at U.S. Power Plants," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    2. Lan, Jing & Munro, Alistair & Liu, Zhen, 2017. "Environmental regulatory stringency and the market for abatement goods and services in China," Resource and Energy Economics, Elsevier, vol. 50(C), pages 105-123.

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    More about this item

    Keywords

    Price discrimination; emission standards; tradable; permits; technology diffusion.;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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