Environmental Regulation and Horizontal Mergers in the Eco-Industry

31 Pages Posted: 16 Jun 2008

See all articles by Joan Canton

Joan Canton

University of Ottawa

Maia David

UMR, INRA-INAPG Economie Publique

Bernard Sinclair-Desgagne

SKEMA Business School - Sophia Antipolis Campus

Date Written: MAY 2008

Abstract

This paper considers the environmental policy and welfare implications of a merger between environment firms (i.e., firms managing environmental resources or supplying pollution abatement goods and services). The traditional analysis of mergers in Cournot oligopolies is extended in two ways. First, we show how environmental policy affects the incentives of environment firms to merge. Second, we stress that mergers in the eco-industry impact welfare beyond what is observed in other sectors, due to an extra effect on pollution abatement efforts; this might lead to disagreements between an anti-trust agency seeking to limit market concentration which can be detrimental to consumer surplus and a benevolent regulator who maximizes total welfare.

Keywords: Eco-Industry, Environmental Policy, Horizontal Mergers

JEL Classification: D62, H23, L11

Suggested Citation

Canton, Joan and David, Maia and Sinclair-Desgagne, Bernard, Environmental Regulation and Horizontal Mergers in the Eco-Industry (MAY 2008). FEEM Working Paper No. 46.2008. Available at SSRN: https://ssrn.com/abstract=1140640 or http://dx.doi.org/10.2139/ssrn.1140640

Joan Canton (Contact Author)

University of Ottawa ( email )

200 Wilbrod Street
Ottawa, Ontario K1N 6N5
Canada

Maia David

UMR, INRA-INAPG Economie Publique ( email )

Centre de Grignon
BP01
Thiverval-Grignon, 78850
France
33 0 1 44 08 72 77 (Phone)

Bernard Sinclair-Desgagne

SKEMA Business School - Sophia Antipolis Campus ( email )

60 rue Dostoïevski
Sophia Antipolis, 06902
France

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