Environmental and Trade Policies for Oligopolistic Industry in the Presence of Consumption Externalities

Jota Ishikawa and Toshihiro Okubo

No DP2010-28, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: We explore the effects of environmental and trade policies with negative consumption externalities when a domestic firm and a foreign rival produce imperfect substitutes and compete in the domestic market. Consumption of the foreign product generates more emissions than that of the domestic product. Emission taxes reduce emissions, harm the foreign firm, but may benefit the domestic firm. Tariffs could mitigate externalities more "effectively" than emission taxes. Consumption subsidies provided to the domestic product may raise emissions and worsen domestic welfare. Stringent environmental policies may induce the foreign firm to produce an environmentally friendly good, though environmental damages may increase.

Keywords: Environmental policies; Trade policies; Consumption externalities; International oligopoly; Differentiated products (search for similar items in EconPapers)
JEL-codes: F13 F18 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2010-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
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Citations: View citations in EconPapers (11)

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