Mergers, pollution and environmental policy

Indrani Roy Chowdhury

MPRA Paper from University Library of Munich, Germany

Abstract: We examine the impact of abatement taxes on the pollution level in a duopoly framework with endogenous market structure. We demonstrate that an increase in abatement taxes could trigger a regime-switch from Cournot competition to merger, as well as from merger to Cournot competition. The nature of this switch is critically dependent on the nature of merger costs. However, in either case, this may cause the pollution level to increase.

Keywords: Mergers; pollution; abatement tax; endogenous market structure (search for similar items in EconPapers)
JEL-codes: Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2006
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