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DELEGATION AND EMISSION TAX IN A DIFFERENTIATED OLIGOPOLY *
Author(s) -
PAL RUPAYAN
Publication year - 2012
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2011.02253.x
Subject(s) - product differentiation , delegation , economics , microeconomics , tax rate , oligopoly , social welfare , welfare , profit (economics) , profit maximization , competition (biology) , industrial organization , cournot competition , monetary economics , market economy , management , ecology , political science , law , biology
This paper examines how product differentiation as well as strategic managerial delegation affects optimal emission tax rate, environmental damage and social welfare, under alternative modes of competition. It shows that, under pure profit maximization, the optimal emission tax rate is not necessarily decreasing in degree of product differentiation. Moreover, the impacts of delegation on the scope for the optimal emission tax rate to be lower for higher degree of product differentiation are very different under alternative modes of competition. Under price (quantity) competition, the equilibrium emission tax rate, environmental damage and social welfare are lower (higher) in the case of delegation.