Competitive permit markets and vertical structures: the relevance of imperfectly competitive eco-industries

Sonia Schwartz and Hubert Stahn

Post-Print from HAL

Abstract: Permit markets lead polluting firms to purchase abatement goods from an eco-industry which is often concentrated. This paper studies the consequences of this sort of imperfectly competitive eco-industry on the equilibrium choices of the competitive polluting firms. It then characterizes the second-best pollution cap. By comparing this situation to one of perfect competition, we show that Cournot competition on the abatement good market contributes not only to a nonoptimal level of emission reduction but also to a higher permit price, which reduces the production level. These distortions increase with market power, measured by the margin taken by the noncompetitive firms, and suggest a second-best larger pollution cap.

Keywords: cerdi (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (10)

Published in Journal of Public Economic Theory, 2014, 16 (1), pp.69-95. ⟨10.1111/jpet.12048⟩

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

Related works:
Journal Article: Competitive Permit Markets and Vertical Structures: The Relevance of Imperfectly Competitive Eco-Industries (2014)
Working Paper: Competitive Permit Markets and Vertical Structures: The Relevance of Imperfect Competitive Eco-Industries (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:halshs-00926472

DOI: 10.1111/jpet.12048

Access Statistics for this paper

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