Unilateral Emission Standards, Quality of Vertically Differentiated Products, and the Global Environment

Keisaku Higahsida () and Tsuyoshi Toshimitsu
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Keisaku Higahsida: School of Economics, Kwansei Gakuin University
Authors registered in the RePEc Author Service: Keisaku Higashida

No 58, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: Employing an environmentally-differentiated products model with heterogeneous consumers in terms of environmental consciousness, this paper examines the effect of a unilateral change in a home emission standard on the qualities of products, aggregate emissions, and welfare of both home and foreign countries. When firms compete with each other in a Cournot fashion, as the home emission standard becomes stricter, aggregate emissions of both domestic and foreign countries decrease, if a firm which produces a gdirtier product h f supplies the same product to both domestic and foreign markets. On the other hand, if the firm supplies different products in environmental features to different markets, a stricter emission standard by the home government increases aggregate emissions of the foreign country. Even in the Bertrand duopoly case, the effects of a stricter emission standard on both countries could be different from each other.

Keywords: emission standards; international duopoly; environmentally differentiated products (search for similar items in EconPapers)
JEL-codes: D43 F12 Q28 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2010-07, Revised 2010-07
New Economics Papers: this item is included in nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:58

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