Duopolists in Output and Permit Markets: Interaction and Regulation

Pauli Lappi

Strategic Behavior and the Environment, 2012, vol. 2, issue 3, 279-293

Abstract: This paper studies the interaction between and the regulation of duopolists in imperfect permit and output markets. The interaction is modeled with a two-stage game in which the permit holding decision is made after the output decision. In the case of dominant buyer this results in a larger total output compared to the output level when the permit markets are perfect but the output market is imperfect. The opposite result holds for dominant sellers. In addition, the second-best regulation is characterized. It is shown that subsidies for permit buying and taxes for permit selling can be used as instruments to increase efficiency in both markets.

Keywords: Cournot duopoly; Emission trading; Imperfect competition; Regulation; Strategic interaction (search for similar items in EconPapers)
JEL-codes: L13 L50 Q50 (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://dx.doi.org/10.1561/102.00000018 (application/xml)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:now:jnlsbe:102.00000018

Access Statistics for this article

More articles in Strategic Behavior and the Environment from now publishers
Bibliographic data for series maintained by Lucy Wiseman ().