Prices vs. Quantities in Monopolistic Competition

Henrik Vetter

No 24203, Unit of Economics Working Papers from Royal Veterinary and Agricultural University, Food and Resource Economic Institute

Abstract: In perfectly competitive markets taxes and quotas are fully equivalent measures for environmental protection. Based on this regulators' revealed preferences for quotas over that of fees finds its explanation in the procedures and spirits of political decision making. This paper offers another explanation: Ordinary welfare economic considerations make a quota preferable to a tax when regulating polluting firms in monopolistically competitive markets.

Keywords: Demand; and; Price; Analysis (search for similar items in EconPapers)
Pages: 23
Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:ags:rvaewp:24203

DOI: 10.22004/ag.econ.24203

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