Revisiting the environmental subsidy in the presence of an eco-industry

Maia David and Bernard Sinclair-Desgagné

Working Papers from HAL

Abstract: This paper re-considers environmental subsidies in the context where polluting firms procure their abatement goods and services from a specialized oligopoly. To maximize social welfare, the regulator must then simultaneously alleviate two distortions: one that comes from pollution and the other that is due to the environment firms' market power. We find that combining an emission tax to a subsidy to polluters cannot lead to first-best, while the opposite conclusion holds if the subsidy is granted instead to environment firms. When public transfers are themselves subject to distortions, however, welfare may be higher if only an emission tax is used.

Keywords: Environment industry; Environmental subsidies; Pigouvian tax; Subvention environnementale; Taxe pigouvienne; Eco-industrie (search for similar items in EconPapers)
Date: 2007
Note: View the original document on HAL open archive server: https://hal.science/hal-00243054
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://hal.science/hal-00243054/document (application/pdf)

Related works:
Working Paper: Revisiting the Environmental Subsidy in the Presence of an Eco-Industry (2006)
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:wpaper:hal-00243054

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().