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
Atlantic Economic Journal – Springer Journals
Published: Jun 4, 2018
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