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Optimal Emissions Taxation under Imperfect Competition in a Durable Good Industry
Author(s) -
Runkel Marco
Publication year - 2004
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/j.1467-8586.2004.00192.x
Subject(s) - imperfect competition , economics , monopoly , oligopoly , benchmark (surveying) , microeconomics , imperfect , competition (biology) , perfect competition , industrial organization , cournot competition , ecology , linguistics , philosophy , geodesy , biology , geography
This paper investigates optimal emissions taxation under imperfect competition in a durable good industry where products are sold (instead of rented). As a benchmark, attention is paid to the special case of monopoly with exogenously given product durability. In line with previous literature, the optimal emission tax in this benchmark model falls short of marginal damage (underinternalization). Extending the benchmark model either to the case of an oligopolistic market structure and/or to the case of endogenous product durability then provides two cases in which the optimal emission tax overinternalizes marginal damage.