Environmental Taxation and the Structure of the Eco-industry

Maia David, Alain-Désiré Nimubona (animubon@uwaterloo.ca) and Bernard Sinclair-Desgagné

No 2007/02, Working Papers from INRA, Economie Publique

Abstract: We examine the e®ect of an emission tax when the abatement good or service is supplied by an imperfectly competitive eco-industry with free entry. We show that a higher tax always increases the number of ¯rms in the eco-industry whereas it has an ambiguous e®ect on indi- vidual and total output in the eco-industry. We derive the condition under which total abatement may actually decrease with the emission tax. We then study the policy implications of these results in terms of optimal tax levels.

Keywords: Eco-industry; Environmental tax; Horizontal mergers (search for similar items in EconPapers)
JEL-codes: D62 H23 L11 (search for similar items in EconPapers)
Date: 2007-06-08
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Citations: View citations in EconPapers (4)

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