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Appears in Collections:Economics Working Papers
Peer Review Status: Unrefereed
Title: Environmental Taxes and Industry Monopolization
Author(s): Schoonbeek, Lambert
de, Vries Frans
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Citation: Schoonbeek L & de Vries F (2008) Environmental Taxes and Industry Monopolization. Stirling Economics Discussion Paper, 2008-19.
Keywords: taxes
market structure
environmental pollution
JEL Code(s): H23
Issue Date: Sep-2008
Series/Report no.: Stirling Economics Discussion Paper, 2008-19
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 emission by maximizing 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.
Type: Working or Discussion Paper
Affiliation: University of Groningen

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