Environmental Taxation and Mergers in Oligopoly Markets with Product Differentiation

Luis Gautier () and Mahelet Fikru ()
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Luis Gautier: Universidad de Málaga, Departamento de Teoría e Historia, Econòmica

Chapter Chapter 10 in Handbook of Merger Control and Environmental Policy, 2024, pp 185-206 from Springer

Abstract: Abstract We analyze the effect of mergers on optimal environmental taxation in a Cournot oligopoly market with product differentiation. Our result indicates that the adjustment in emission tax crucially depends on the post-merger output distortion and pollution intensities. Specifically, we find that the optimal emission tax increases post-merger as long as pollution intensity of firms is higher and output distortion smaller post-merger than pre-merger. Furthermore, our result suggests that there is no need to revise environmental policy in markets where pollution intensity of firms does not change post-merger and (i) products are completely differentiated, or (ii) there are many firms for any degree of product differentiation.

Date: 2024
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Journal Article: Environmental taxation and mergers in oligopoly markets with product differentiation (2017)
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DOI: 10.1007/978-3-031-63549-6_10

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