The persistence of environmental and social strategies under emission permits

Gianluca Iannucci and Alessandro Tampieri

Energy Economics, 2024, vol. 138, issue C

Abstract: In this paper, we analyse the long-run industry configuration of an oligopoly where profit-seeking (PS) and environmentally socially responsible (ECSR) firms compete in quantities. We adopt an evolutionary setting to determine the firms’ endogenous choice of statute (PS or ECSR). Pollution is regulated through an Emission Trading System (ETS) scheme that allocates emissions rights to firms. Firms may also invest in emission abatement technology to reduce the cost of emission rights. Our findings show that the introduction of an ETS favours the persistence of the ECSR strategy by reducing the share of PS firms in the industry. In contrast, an increase in the stringency of the ETS policy makes the PS strategy more competitive.

Keywords: Mixed oligopoly markets; Emission reduction investment; Environmentally concerned firms; Emission trading system (search for similar items in EconPapers)
JEL-codes: C73 H23 L13 L21 M14 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:138:y:2024:i:c:s0140988324005322

DOI: 10.1016/j.eneco.2024.107824

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