About polluting eco-industries: optimal provision of abatement goods and Pigouvian fees
Journal: Environmental Economics (Vol.8, No. 3)Publication Date: 2017-11-01
Authors : Damien Sans; Sonia Schwartz; Hubert Stahn;
Page : 46-61
Keywords : heterogeneous firms; Pigouvian tax; polluting eco-industry; welfare analysis;
Abstract
In this article, the authors introduce a polluting eco-industry. Depending on the level of damage, there are two optimal equilibria. If the damage is low, one generalizes the usual results of the economic literature to the polluting eco-industry: the dirty firm partially abates their emissions, only efficient eco-industry firms produce and the abatement level increases with the damage. However, very specific results are obtained if the damage is high. In this case, not all efficient eco-industry firms produce. The abatement level and the number of active eco-industry firms both decrease as the damage increases. The authors finally show that a well-designed Pigouvian tax implements these equilibria in a competitive economy.
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Last modified: 2018-03-19 23:56:52