On Outsourced Abatement Services: Market Power and Efficient Regulation - Archive ouverte HAL Accéder directement au contenu
Article Dans Une Revue Annals of Economics and Statistics Année : 2019

On Outsourced Abatement Services: Market Power and Efficient Regulation

Résumé

In this paper, we consider competitive polluting firms that outsource their abatement activity to an upstream imperfect competitive eco-industry to comply with environmental regulation. In this case, we show that an usual environmental policy based on a Pigouvian tax or a pollution permit market reaches the first-best outcome. The main intuition is based on the idea that purchasing pollution reduction services instead of pollution abatement inputs modifies for each potential tax rate (or out of the equilibrium permit price) the nature of the arbitrage between pollution and abatement. This induces a demand for abatement services which is, at least partially, strongly elastic and therefore strongly reduces upstream market power. This argument is first illustrated with an upstream monopoly selling eco-services to a representative polluting firm under a usual Pigouvian tax. We then progressively extend the result to permit markets, heterogeneous downstream polluters and heterogeneous upstream Cournot competitors. JEL Codes: Q58, D43
Fichier principal
Vignette du fichier
On Outsourced Abatement Services_2019.pdf (379.33 Ko) Télécharger le fichier
Origine : Fichiers produits par l'(les) auteur(s)
Loading...

Dates et versions

hal-02477911 , version 1 (13-02-2020)

Identifiants

Citer

Damien Sans, Sonia Schwartz, Hubert Stahn. On Outsourced Abatement Services: Market Power and Efficient Regulation. Annals of Economics and Statistics, 2019, 136, pp.55. ⟨10.15609/annaeconstat2009.136.0055⟩. ⟨hal-02477911⟩
128 Consultations
146 Téléchargements

Altmetric

Partager

Gmail Facebook X LinkedIn More