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Long-run welfare effect of energy conservation regulation

Toshihiro Matsumura () and Atsushi Yamagishi

Economics Letters, 2017, vol. 154, issue C, 64-68

Abstract: We investigate the long-run effect of energy conservation regulation, which forces firms to raise energy-saving investment above the cost-minimizing level. If Pigovian tax is imposed, additional regulation always harms social welfare under perfect competition, while it can improve welfare under imperfect competition. Our result under imperfect competition holds regardless of whether strategies are strategic substitutes or complements in contrast to direct entry regulation.

Keywords: Energy-saving; Environmental tax; Free entry market; Consumer-benefiting regulation (search for similar items in EconPapers)
JEL-codes: D61 H54 L13 (search for similar items in EconPapers)
Date: 2017
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