About polluting eco-industries: optimal provision of abatement goods and Pigouvian fees

Damien Sans, Sonia Schwartz and Hubert Stahn
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Damien Sans: GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

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Abstract: In this article, the authors introduce a polluting eco-industry. Depending on the level of damage, there are two optimal equilibria. If the damage is low, one generalizes the usual results of the economic literature to the polluting eco-industry: the dirty firm partially abates their emissions, only efficient eco-industry firms produce and the abatement level increases with the damage. However, very specific results are obtained if the damage is high. In this case, not all efficient eco-industry firms produce. The abatement level and the number of active eco-industry firms both decrease as the damage increases. The authors finally show that a well-designed Pigouvian tax implements these equilibria in a competitive economy.

Keywords: polluting eco-industry; heterogeneous firms; welfare analysis; Pigouvian tax (search for similar items in EconPapers)
Date: 2017-09-13
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Published in Environmental Economics, 2017, 8 (3), pp.46 - 61. ⟨10.21511/ee.08(3).2017.05⟩

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Related works:
Working Paper: About Polluting Eco-Industries: Optimal Provision of Abatement Goods and Pigouvian Fees (2014)
Working Paper: About Polluting Eco-Industries: Optimal Provision of Abatement Goods and Pigouvian Fees (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01682684

DOI: 10.21511/ee.08(3).2017.05

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