Environmental Regulation and the Eco-Industry

32 Pages Posted: 22 Apr 2005

See all articles by Bernard Sinclair-Desgagne

Bernard Sinclair-Desgagne

SKEMA Business School - Sophia Antipolis Campus

Maia David

UMR, INRA-INAPG Economie Publique

Date Written: April 2005

Abstract

This paper re-examines environmental regulation, under the assumption that pollution abatement technologies and services are provided by an imperfectly competitive environment industry. It is shown that each regulatory instrument (emission taxes and quotas; design standards; and voluntary agreements) has a specific impact on the price-elasticity of the polluters' demand for abatement services, hence on the market power of the eco-industry and the resulting cost of abatement. This implies that the optimal pollution tax will be higher than the marginal social cost of pollution, while a voluntary approach to pollution abatement may fail unless the eco-industry itself is willing to participate.

Keywords: Pollution regulation, End-of-pipe pollution abatement, Environment

JEL Classification: H23, L13, Q58

Suggested Citation

Sinclair-Desgagne, Bernard and David, Maia, Environmental Regulation and the Eco-Industry (April 2005). FEEM Working Paper No. 56.05. Available at SSRN: https://ssrn.com/abstract=705182 or http://dx.doi.org/10.2139/ssrn.705182

Bernard Sinclair-Desgagne (Contact Author)

SKEMA Business School - Sophia Antipolis Campus ( email )

60 rue Dostoïevski
Sophia Antipolis, 06902
France

Maia David

UMR, INRA-INAPG Economie Publique ( email )

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

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