Pollution abatement subsidies and the eco-industry

Maia David and Bernard Sinclair-Desgagné

Post-Print from HAL

Abstract: This paper considers the combination of pollution taxes and abatement subsidies when some polluting firms procure their abatement goods and services from an oligopolistic eco-industry. The regulator must here cope with two simultaneous price distortions: one that comes from pollution and the other which is caused by the eco-industry's market power. In this context, we show that taxing emissions while subsidizing polluters' abatement efforts cannot lead to first-best, but the opposite occurs provided it is the eco-industry's output which is subsidized. When public transfers also create distortions, welfare can be higher if the regulator uses only an emission tax, but subsidizing abatement suppliers while taxing emissions remains optimal when the eco-industry is concentrated.

Keywords: INDUSTRIE; ECO-INDUSTRIE; SUBVENTION ENVIRONNEMENTALE; COMBINAISON D'INSTRUMENTS; ENVIRONMENT GOODS AND SERVICES INDUSTRY; PIGOUVIAN TAXES; POLLUTION ABATEMENT SUBSIDIES (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (56)

Published in Environmental and Resource Economics, 2010, 45 (2), pp.271-282. ⟨10.1007/s10640-009-9315-3⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Pollution Abatement Subsidies and the Eco-Industry (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01172938

DOI: 10.1007/s10640-009-9315-3

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().