Politica estratégica de exportación en presencia de regulación ambiental

Dolores Riveiro
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Dolores Riveiro: Departamento de Fundamentos del Analisis Economico, Universidade de Santiago de Compostela

No 34, Documentos de trabajo - Analise Economica from IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia

Abstract: Using a duopoly model in which one home firm and one foreign firm compete in a third country market, this paper analyses how environmental regulation affects the optimal commercial policy and the strategic use of environmental policy. In particular, this paper reviews the typical outcome that environmental regulation reduces welfare in the absence of commercial policy and that, in order to maximise welfare, a stronger commercial policy is required when firms compete in quantities, while when competition is in prices policy should be weaker. The paper also pays attention to the outcome that the strategic use of environmental policy consists of weakening it in the former case and strengthening it in the latter one. Considering that environmental regulation is determined by the bargaining between that sector of society concerned with the environment and the polluting firm, this paper proves that under price competition environmental regulation may be welfare improving in the absence of commercial policy. In such a case, the optimal policy is not necessarily an export tax but may be an export subsidy or, under particular conditions, free trade.

Keywords: strategic commercial policy; quantities competition; price competition; environmental regulation. (search for similar items in EconPapers)
Pages: 33 pages
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:edg:anecon:0034

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