 Markup dispersion, industry coverage and the cost of environmental regulationHaoyang Li, Nan Wu and Jinhua Zhao Journal of Environmental Economics and Management, 2025, vol. 130, issue C Abstract: The environmental economics literature has long established that all polluters should be regulated to equalize their marginal abatement costs. We make the case for “partial coverage” where only a subset of polluting industries is regulated. Environmental regulation, by moving factors of production from dirtier to cleaner industries, ameliorates the costs of imperfect competition if the cleaner industries also have higher markups. The selection of industries to be regulated depends on the correlation between industry markups and dirtiness, and may not be those with the highest emissions. Partial coverage may dominate full coverage when the abatement target is moderate. We apply the model to environmental regulation in China and show that significant cost savings can be achieved by switching from full to partial coverage. Keywords: Partial coverage; Markup dispersion; Emission intensity; Cost-effectiveness (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:130:y:2025:i:c:s0095069625000142 DOI: 10.1016/j.jeem.2025.103130 Access Statistics for this article Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates More articles in Journal of Environmental Economics and Management from Elsevier |
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