Environmental Taxation and Mergers in Oligopoly Markets with Product Differentiation
Abstract
We analyze the effect of mergers on optimal environmental taxation in a Cournot oligopoly market with product differentiation. Our result indicates that the adjustment in emission tax crucially depends on the post-merger output distortion and pollution intensities. Specifically, we find that the optimal emission tax increases post-merger as long as pollution intensity of firms is higher and output distortion smaller post-merger than pre-merger. Furthermore, our result suggests that there is no need to revise environmental policy in markets where pollution intensity of firms does not change post-merger and (i) products are completely differentiated, or (ii) there are many firms for any degree of product differentiation.
Recommended Citation
Fikru, M. G., & Gautier, L. (2017). Environmental Taxation and Mergers in Oligopoly Markets with Product Differentiation. Journal of Economics/ Zeitschrift fur Nationalokonomie, 122(1), pp. 45-65. Springer-Verlag Wien.
The definitive version is available at https://doi.org/10.1007/s00712-017-0531-y
Department(s)
Economics
Keywords and Phrases
Carbon tax; Emission tax; End-of-the-pipe abatement; Mergers and acquisitions; Output distortion; Pollution intensity
International Standard Serial Number (ISSN)
0931-8658; 1617-7134
Document Type
Article - Journal
Document Version
Citation
File Type
text
Language(s)
English
Rights
© 2017 Springer-Verlag Wien, All rights reserved.
Publication Date
01 Sep 2017
