Title

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.

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

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