Environmental Regulation and the Eco-industry

Maia David and Bernard Sinclair-Desgagné

CIRANO Working Papers from CIRANO

Abstract: This paper re-examines environmental regulation, under the assumption that pollution abatement technologies and services are provided by an imperfectly competitive environment industry. It is shown that each regulatory instrument (emission taxes and quotas; design standards; and voluntary agreements) has a specific impact on the price-elasticity of the polluters' demand for abatement services, hence on the market power of the eco-industry and the resulting cost of abatement. This implies that the optimal pollution tax will be higher than the marginal cost of pollution damage, while a voluntary approach to pollution abatement may fail unless the eco-industry itself is properly regulated. Cet article reconsidère la réglementation environnementale, sous l'hypothèse que les technologies et services de réduction de la pollution sont offerts par des entreprises spécialisées formant un oligopole. On y montre que chaque approche réglementaire (taxes et quotas sur les émissions polluantes, normes techniques, ou approches volontaires) a un impact particulier sur l'élasticité-prix de la demande de services en dépollution, donc sur le pouvoir de marché de l'éco-industrie et les coûts de réduction de la pollution. Ceci entraîne, entre autres, qu'une taxe optimale sur les émissions devrait être supérieure au coût marginal des dommages associés à celles-ci, tandis qu'une approche volontaire de réduction des émissions polluantes peut se révéler inopérante si les pratiques de marché de l'éco-industrie ne sont pas elles-mêmes correctement réglementées.

Keywords: pollution regulation; end-of-pipe pollution abatement; environment industry; régulation de la pollution; réduction en bout de chaîne de la pollution; industries environnementales (search for similar items in EconPapers)
JEL-codes: H23 L13 Q58 (search for similar items in EconPapers)
Date: 2004-09-01
New Economics Papers: this item is included in nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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https://cirano.qc.ca/files/publications/2004s-42.pdf

Related works:
Journal Article: Environmental Regulation and the Eco-Industry (2005)
Working Paper: Environmental Regulationand the Eco-Industry (2005)
Working Paper: Environmental Regulation and the Eco-Industry (2005)
Working Paper: Environmental regulation and the eco-industry (2005)
Working Paper: Environmental Regulation and the Eco-Industry (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:cir:cirwor:2004s-42

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