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Long-Run Welfare Effect of Energy Conservation Regulation

Toshihiro Matsumura and Atsushi Yamagishi

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate the long-run effect of energy conservation regulation, which forces firms to raise energy-saving investment above the cost-minimising level (i.e. the business-as-usual level). If Pigovian tax is imposed, additional regulation always harms social welfare under perfect competition. However, under imperfect competition, additional regulation can improve welfare even if Pigovian tax is imposed. Thus, under imperfect competition, there is a rationale for additional energy conservation regulation even in the presence of Pigovian tax. Our result under imperfect competition holds regardless of whether strategies are strategic substitutes or complements in contrast to direct entry regulation.

Keywords: energy-saving; environmental tax; free entry market; consumer-benefiting regulation (search for similar items in EconPapers)
JEL-codes: D61 H54 L13 (search for similar items in EconPapers)
Date: 2016-11-13
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Long-run welfare effect of energy conservation regulation (2017) Downloads
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