Imperfect competition, emissions tax and the Porter hypothesis

Flavio Menezes and Jorge Pereira ()
Additional contact information
Jorge Pereira: School of Economics, University of Queensland, Brisbane, Australia

No DP022023, Australian Institute for Business and Economics from School of Economics, University of Queensland, Australia

Abstract: This paper investigates the conditions under which the design of an emissions tax can align social and private interests. Our contribution is to determine the general conditions for firms' profits and social welfare to be higher under the implementation of an emissions tax than under no tax. We consider n firms producing an homogeneous product and competing over supply schedules, which covers a continuum of imperfect competition equilibria from Bertrand to Cournot. We show that, as competition intensifies, the pass-through of the tax to consumers increases, to a point where the price rises more than offsets the net result of the investment outlay. Our analysis provides new insights into the trade-off between environmental policy, market competition and the so-called "win-win" outcome for firms and society.

Keywords: Technology; R&D; Environment; Policy; Emission tax; Subsidy; Porter Hypothesis (search for similar items in EconPapers)
JEL-codes: H23 O32 O38 Q55 Q58 (search for similar items in EconPapers)
Date: 2023-02-28
New Economics Papers: this item is included in nep-com, nep-ene, nep-env, nep-gth, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://aibe.uq.edu.au/files/9262/DP022023.pdf (application/pdf)

Related works:
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:qld:uqaibe:2

Access Statistics for this paper

More papers in Australian Institute for Business and Economics from School of Economics, University of Queensland, Australia Contact information at EDIRC.
Bibliographic data for series maintained by ().