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Ecological Dumping under Monopolistic Competition
Author(s) -
Pfluger Michael
Publication year - 2001
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00266
Subject(s) - monopolistic competition , economics , social planner , externality , microeconomics , dumping , tax competition , competition (biology) , monopoly , capital (architecture) , production (economics) , pollution , public economics , ecology , indirect tax , history , archaeology , tax reform , biology
The competitive choice of emission taxes by two governments is analysed in a model of monopolostic competition with capital mobility where pollution externalities are regional. Assuming that governments have no other policy instrument apart from emission taxes at their disposal, I show that governments choose inefficiently low (high) taxes if the importance of emissions in production is small (large) relative to transport costs and the mark‐up. In contrast to the previous literature, the marginal disutility of pollution is not among the parameters which separate the non‐cooperative choice of emission taxes from the social planner's choice. JEL classification : F 1; H 7; Q 2