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About Polluting Eco-Industries: Optimal Provision of Abatement Goods and Pigouvian Fees

Damien Sans (), Sonia Schwartz () and Hubert Stahn

Working Papers from HAL

Abstract: In this article we introduce a polluting eco-industry. Depending on the level of the damage, we find one of two optimal equilibria. If the damage is low, we generalize 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, we obtain very specific results 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. We 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: 2014-11
New Economics Papers: this item is included in nep-bec, nep-env and nep-res
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Working Paper: About polluting eco-industries: optimal provision of abatement goods and Pigouvian fees (2017)
Working Paper: About Polluting Eco-Industries: Optimal Provision of Abatement Goods and Pigouvian Fees (2014) Downloads
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