Average markup and welfare in Cournot oligopoly with environmental policies

Luca Correani () and Patrizio Morganti ()
Additional contact information
Luca Correani: Tuscia University
Patrizio Morganti: Tuscia University

Review of Economic Design, 2025, vol. 29, issue 4, No 6, 830 pages

Abstract: Abstract In recent years, governments worldwide have implemented various environmental policies to combat environmental degradation. Most of these policies use either emission taxes or tradable permits, sometimes in combination. This paper employs a Cournot oligopoly model to compare the effects of these two policy instruments, focusing on emissions from both polluting (brown) and clean (green) firms. Our findings indicate that i) taxing emissions leads to higher social welfare than tradable permits, especially in concentrated markets; ii) both policy instruments are superior to a no-policy scenario in competitive markets; iii) the welfare gap between these regimes increases when differences in abatement technology diminish or when there are fewer clean firms; iv) imposing taxes on polluting firms results in a higher average markup, particularly in more concentrated markets.

Keywords: Environmental Policy; Oligopoly; Welfare; Markup (search for similar items in EconPapers)
JEL-codes: I3 L1 Q5 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10058-025-00380-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:reecde:v:29:y:2025:i:4:d:10.1007_s10058-025-00380-6

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/10058

DOI: 10.1007/s10058-025-00380-6

Access Statistics for this article

Review of Economic Design is currently edited by Atila Abdulkadiroglu, Fuhito Kojima and Tilman Börgers

More articles in Review of Economic Design from Springer, Society for Economic Design
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().