Joint ventures, pollution and environmental policy

Indrani Roy Chowdhury ()
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Indrani Roy Chowdhury: National Institute of Public Finance and Policy

Working Papers from National Institute of Public Finance and Policy

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 joint ventures to Cournot competition, causing the pollution level to increase. Moreover, abatement taxes can implement the first best outcome if and only if the industry is not too polluting. In case it is, the second best level of taxes may or may not equal the optimal tax under either joint venture, or Cournot competition.

Keywords: Joint ventures; Pollution; Abatement tax; Endogenous market structure (search for similar items in EconPapers)
JEL-codes: H23 L13 (search for similar items in EconPapers)
Pages: 28
Date: 2005-04
Note: Working Paper 31, 2005
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Persistent link: https://EconPapers.repec.org/RePEc:npf:wpaper:05/31

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