Environment, imperfect competition, and trade: Insights for optimal policy in general equilibrium

Rudy Colacicco

Research in Economics, 2021, vol. 75, issue 2, 144-151

Abstract: I build a two-country general oligopolistic equilibrium model, in which sectors differ in emissions and technologies, and pollution can be transboundary. I derive the optimal bilateral environmental policy for the economy as a whole, for the cases in which the environmental damage either linearly or quadratically increases in total pollution. The analysis highlights that the optimal emission tax can even be negative, and bilateral trade liberalization should be matched with either a rise or a fall in the optimal emission tax. The moments of the emission distribution and technology distribution across sectors are fundamental to implement optimal environmental policies.

Keywords: Cournot Competition; Emission Tax; Environmental Policy; General Oligopolistic Equilibrium (GOLE); Trade Liberalization; Transboundary Pollution (search for similar items in EconPapers)
JEL-codes: F12 F13 F18 H23 Q56 Q58 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: -Environment, Imperfect Competition, and Trade: Insights for Optimal Policy in General Equilibrium (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:75:y:2021:i:2:p:144-151

DOI: 10.1016/j.rie.2021.04.001

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