Is It More Profitable to Acquire Cleaner or Dirtier Firms?
Abstract
When polluting firms acquire firms in the same industry, do they seek out greener firms to make use of their cleaner technology, especially under threat of penalty for pollution? How does penalty for pollution affect the incentive for acquisition? The result of this study indicates that firms who are penalized for their pollution do not necessarily seek out greener firms to acquire. Our result suggests that it is more profitable for polluting firms to takeover dirtier firms and shut them down. Our result also indicates that, at lower levels of emission tax, the incentive for acquiring a dirtier firm increases with an increase in tax but the opposite is true for higher levels of emission tax.
Recommended Citation
Fikru, M. G., & Insall, M. (2016). Is It More Profitable to Acquire Cleaner or Dirtier Firms?. Environmental Economics and Policy Studies, 18(4), pp. 443-457. Springer-Verlag Tokyo.
The definitive version is available at https://doi.org/10.1007/s10018-015-0118-1
Department(s)
Economics
Second Department
Mathematics and Statistics
Keywords and Phrases
Abatement; Acquisitions; Emission tax; Pollution intensity; Profitability
International Standard Serial Number (ISSN)
1432-847X; 1867-383X
Document Type
Article - Journal
Document Version
Citation
File Type
text
Language(s)
English
Rights
© 2016 Society for Environmental Economics and Policy Studies and Springer Japan, All rights reserved.
Publication Date
01 Oct 2016
