Effects of Mixed Oligopoly and Emission Taxes on the Market and Environment

Woohyung Lee, Tohru Naito and Ki-Dong Lee
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Woohyung Lee: Keimyung University
Tohru Naito: Doshisha University

Korean Economic Review, 2017, vol. 33, 267-294

Abstract: The literature has mainly focused on the optimal emission tax rate to internalize the negative externalities of pollutants. Thus, we investigate firms’ technology adoption behavior under an emission taxation system. We also examine the possibility of using a elfare-maximizing public firm with eco-friendly production technology to reduce environmental damage. Private firms can choose clean or normal technology for their production process. The analysis indicates several main results. First, under the emission taxation system, private firms adopt clean technologies even though they bear additional abatement costs in the production process if environmental damage caused by their production process is large. Second, mixed oligopoly is socially desirable when environmental damage is low. Thus, private firms take normal technology. Finally, when private firms adopt clean technology, mixed oligopoly is better than emission taxes if environmental damage is low and if the market is less competitive from a social welfare perspective.

Keywords: Emission Tax; Mixed Oligopoly; Environmental Damage; Pollution Abatement (search for similar items in EconPapers)
JEL-codes: D43 H23 L13 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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