Selective penalization of polluters: an inf-convolution approach

Ngo Long and Antoine Soubeyran

Economic Theory, 2005, vol. 25, issue 2, 454 pages

Abstract: We consider an asymmetric polluting oligopoly. We demonstrate that optimal tax rates per unit of emission are not the same for all firms. We call this property selective penalization. Our Optimal Distortion Theorem states that the efficient tax structure requires that high cost firms pay a higher tax rate. Our Pro-concentration Motive Theorem states that optimal taxes increase the concentration of the industry, as measured by the Herfindahl index. Our Magnification Effect indicates that the variance of marginal costs is magnified by a factor which depends on the marginal cost of public funds. Copyright Springer-Verlag Berlin/Heidelberg 2005

Keywords: Pollution; Environmental regulation; Oligopoly. (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (17)

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Working Paper: Selective Penalization Of Polluters: An Inf-Convolution Approach (2002)
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DOI: 10.1007/s00199-003-0433-9

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