Emission Tax and Market Power

Emission Tax and Market Power Atl Econ J (2018) 46:249–250 https://doi.org/10.1007/s11293-018-9578-6 ANTHOLOGY Sang Won Yoon Published online: 4 June 2018 International Atlantic Economic Society 2018 JEL L13 Q00 The optimal emission tax rate for a firm with monopoly power must balance the social benefit of a reduction in emission against an increase in deadweight loss from output restriction, and is less than the marginal social damage of emission (Barnett, American Economic Review, 1980). Through use of a Cournot model of duopoly competition with linear demand and constant costs, Bárcena-Ruiz and Garzón (Spanish Economic Review, 2002) show that the environmental tax burden becomes heavier if the owners design an incentive contract for the manager based on the combination of profits and sales rather than utilizing a model with profit-maximizing duopolists. However, they do not address whether or not the optimal tax rate is less than the marginal social damage of emission. We examine an emission tax in an oligopoly equilibrium with strategic delega- tion, where N symmetric firms face an inverse demand function f(Q)and emit pollution. Let E(s )and c(q , w ) denote the environmental damage and total cost for i i i each firm i =1, 2, …N,where s , q and w http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Atlantic Economic Journal Springer Journals

Emission Tax and Market Power

Loading next page...
 
/lp/springer_journal/emission-tax-and-market-power-049U7TR5vQ
Publisher
Springer US
Copyright
Copyright © 2018 by International Atlantic Economic Society
Subject
Economics; Economics, general; Macroeconomics/Monetary Economics//Financial Economics; Microeconomics; International Economics; Public Finance
ISSN
0197-4254
eISSN
1573-9678
D.O.I.
10.1007/s11293-018-9578-6
Publisher site
See Article on Publisher Site

Abstract

Atl Econ J (2018) 46:249–250 https://doi.org/10.1007/s11293-018-9578-6 ANTHOLOGY Sang Won Yoon Published online: 4 June 2018 International Atlantic Economic Society 2018 JEL L13 Q00 The optimal emission tax rate for a firm with monopoly power must balance the social benefit of a reduction in emission against an increase in deadweight loss from output restriction, and is less than the marginal social damage of emission (Barnett, American Economic Review, 1980). Through use of a Cournot model of duopoly competition with linear demand and constant costs, Bárcena-Ruiz and Garzón (Spanish Economic Review, 2002) show that the environmental tax burden becomes heavier if the owners design an incentive contract for the manager based on the combination of profits and sales rather than utilizing a model with profit-maximizing duopolists. However, they do not address whether or not the optimal tax rate is less than the marginal social damage of emission. We examine an emission tax in an oligopoly equilibrium with strategic delega- tion, where N symmetric firms face an inverse demand function f(Q)and emit pollution. Let E(s )and c(q , w ) denote the environmental damage and total cost for i i i each firm i =1, 2, …N,where s , q and w

Journal

Atlantic Economic JournalSpringer Journals

Published: Jun 4, 2018

There are no references for this article.

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create lists to
organize your research

Export lists, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off