Modelling Mergers among Polluting Firms When Environmental Policy is Endogenous
Abstract
This article builds a theoretical model to study merger decisions among polluting firms. We adopt the idea of endogenous policies where governments adjust optimal policy after the occurrence of mergers. We find that the adjustment in policy provides additional incentives to merge. Given a specific model of merger process with endogenous policies, we find that the optimal merger is the one among highly polluting firms. Therefore, in the post-merger market the merged entity is dirtier compared to stand-alone firms.
Recommended Citation
Fikru, M. G. (2016). Modelling Mergers among Polluting Firms When Environmental Policy is Endogenous. Economic Analysis and Policy, 49, pp. 1-6. Elsevier.
The definitive version is available at https://doi.org/10.1016/j.eap.2015.09.002
Department(s)
Economics
Keywords and Phrases
Cleaner technology; Emission tax; End-of-the-pipe-type abatement; Pollution-intensity
International Standard Serial Number (ISSN)
0313-5926
Document Type
Article - Journal
Document Version
Citation
File Type
text
Language(s)
English
Rights
© 2016 Elsevier, All rights reserved.
Publication Date
01 Mar 2016
