Piecemeal Multilateral Environmental Policy Reforms Under Asymmetric Oligopoly

15 Pages Posted: 11 Dec 2007

See all articles by Sajal Lahiri

Sajal Lahiri

Southern Illinois University Carbondale - Department of Economics

George Symeonidis

University of Essex - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: 2006-08-25

Abstract

We develop a general two-country model with oligopolistic interdependence in which a fixed number of firms make their output and emission decisions simultaneously. We examine the effect of multilateral reforms of emission taxes on global emission levels. With sufficient asymmetry in pollution intensities between the two countries, a proportional multilateral increase in emission tax rates can increase global emission levels. However, a multilateral equal increase of emission tax rates unambiguously reduces global emission levels. We also consider the case of free entry and exit of firms, and find a rule of multilateral reforms which unambiguously lowers total emission levels.

Suggested Citation

Lahiri, Sajal and Symeonidis, George, Piecemeal Multilateral Environmental Policy Reforms Under Asymmetric Oligopoly (2006-08-25). Journal of Public Economic Theory, Vol. 9, Issue 5, pp. 885-899, October 2007. Available at SSRN: https://ssrn.com/abstract=1067133 or http://dx.doi.org/10.1111/j.1467-9779.2007.00336.x

Sajal Lahiri (Contact Author)

Southern Illinois University Carbondale - Department of Economics ( email )

MC 415
1000 Faner Drive
Carbondale, IL 62901
United States

George Symeonidis

University of Essex - Department of Economics ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom
+44 1206 872 511 (Phone)
+44 1206 872 724 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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