The Impact of Foreign Emission Tax on Domestic Merger Profitability

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

Chapter Chapter 3 in Handbook of Merger Control and Environmental Policy, 2024, pp 47-62 from Springer

Abstract: Abstract This chapter considers a two-country model with oligopolistic interdependence to examine merger incentives arising from environmental policy changes. We consider changes in the emission tax in a foreign country and study how this affects the profitability of a merger in a home country. Results suggest that the effects on merger profitability depend on pollution intensity ratios in the foreign country which is a technology parameter and market power ratios in the home country which is a market structure parameter. Our analysis is relevant to study the effects of environmental policy on merger incentives in a global context.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:nrmchp:978-3-031-63549-6_3

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DOI: 10.1007/978-3-031-63549-6_3

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