Optimal Emission Tax with Endogenous Location Choice of Duopolistic Firms

Masako Ikefuji, Jun-ichi Itaya () and Makoto Okamura
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Makoto Okamura: Hiroshima University

No 2010.6, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper explores optimal environmental tax policy under which duopoly firms strategically choose the location of their plants in a simple three-stage game. We examine how the relationship between the optimal emission tax and the choice of location of duopoly firms affects the welfare of the home country. We characterize the relationship between the optimal emission tax and the fixed cost, depending on the degree of environmental damage from production. Finally, we show the existence of asymmetric equilibrium in which either firm chooses relocation of its plant even if the duopoly firms are identical ex ante.

Keywords: Environmental policy; Relocation; Welfare (search for similar items in EconPapers)
JEL-codes: H23 L13 (search for similar items in EconPapers)
Date: 2010-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-pub and nep-reg
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Optimal Emission Tax with Endogenous Location Choice of Duopolistic Firms (2016)
Working Paper: Optimal emission tax with endogenous location choice of duopolistic firms (2013)
Working Paper: Optimal Emission Tax with Endogenous Location Choice of Duopolistic Firms (2010)
Working Paper: Optimal emission tax with endogenous location choice of duopolistic firms (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2010.6

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