|Appears in Collections:||Economics Journal Articles|
|Peer Review Status:||Refereed|
|Title:||Environmental taxes and industry monopolization|
de Vries, Frans
Pollution Economic aspects
Environmental impact charges Great Britain
Taxation Great Britain Environmental aspects
|Citation:||Schoonbeek L & de Vries F (2009) Environmental taxes and industry monopolization. Journal of Regulatory Economics, 36 (1), pp. 94-106. https://doi.org/10.1007/s11149-009-9093-4|
|Abstract:||This paper considers a market with an incumbent monopolistic firm and a potential entrant. Production by both firms causes polluting emissions. The government selects a tax per unit of emission to maximize social welfare. The size of the tax rate affects whether or not the potential entrant enters the market. We identify the conditions that create a market structure where the preferences of the government and the incumbent firm coincide. Interestingly, there are cases where both the government and incumbent firm prefer a monopoly. Hence, the government might induce profitable monopolization by using a socially optimal tax policy instrument.|
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