Hattori, Keisuke and Kitamura, Takahiro (2011): Endogenous Timing in Strategic Environmental Policymaking.
Download (155kB) | Preview
In this paper, we endogenize the timing of policymaking in a simple two-country model of strategic environmental policy. We consider a timing game in which two policymakers non-cooperatively decide their preferred sequence of moves before setting emission tax rates. We show that whether the policymakers implement emission tax policies simultaneously or sequentially crucially depends on the magnitude of environmental damages: When the damages are insignificant, the tax rates are strategic substitutes and the simultaneous-move policymaking emerges in equilibrium. In contrast, when the damages are significant, the tax rates are strategic complements and the sequential-move policymaking emerges. In addition, we extend the model by allowing for differences in the vulnerability to environmental damages between countries. When the differences are large, the unique equilibrium of the game is the situation where the less vulnerable country acts as a leader. In the case where multiple equilibrium emerges, the risk dominant equilibrium is also that the less vulnerable country leads.
|Item Type:||MPRA Paper|
|Original Title:||Endogenous Timing in Strategic Environmental Policymaking|
|Keywords:||Strategic environmental policy; Endogenous timing; Environmental tax; Duopoly|
|Subjects:||Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation > Q28 - Government Policy
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q56 - Environment and Development ; Environment and Trade ; Sustainability ; Environmental Accounts and Accounting ; Environmental Equity ; Population Growth
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
|Depositing User:||Keisuke Hattori|
|Date Deposited:||06. Mar 2011 15:59|
|Last Modified:||31. Dec 2015 08:30|
Amir, R., Stepanova, A., (2006) Second-mover advantage and price leadership in Bertrand duopoly, Games and Economic Behavior 55, 1-20.
Barrett, S., (1994) Strategic environmental policy and international trade, Journal of Public Economics 54, 325-338.
Bárcena Ruiz, J.C., (2006) Environmental taxes and first-mover advantages, Environmental and Resource Economics 35, 19-39.
Conrad, K., (1993) Taxes and subsidies for pollution-intensive industries as trade policy, Journal of Environmental Economics and Management 25, 121-135.
van Damme, E., Hurkens, S., (2004) Endogenous price leadership, Games and Economic Behavior 47, 404-420.
Dowrick, S., (1986) Von Stackelberg and Cournot duopoly: Choosing roles, RAND Journal of Economics 17, 251-260.
Fujiwara, K., (2009) A timing game model of strategic environmental policy (in Japanese), Keizaigaku Ronkyu (Journal of Economics of Kwansei Gakuin University) 63, 145-159.
Gal-Or, E., (1985) First mover and second mover advantages, International Economic Review 26, 649-653.
Greaker, M., (2003) Strategic environmental policy; eco-dumping or a green strategy? Journal of Environmental Economics and Management 45, 692-707.
Hamilton, J.H., Slutsky, S.M. (1990) Endogenous timing in duopoly games: Stackelberg or Cournot equilibria, Games and Economic Behavior 2, 29?46.
Hattori, K., (2010) Strategic voting for noncooperative environmental policies in open economies, Environmental and Resource Economics 46, 459-474.
Harsanyi, J.C., Selten, R., (1988) A Game Theory of Equilibrium Selection in Games, Cambridge, MA, MIT Press.
Kempf, H., Rota-Graziosi, G., (2010) Endogenizing leadership in tax competition, Journal of Public Economics 94, 768-776.
Kempf, H., Rota-Graziosi, G., (2010) Leadership in public good provision: A timing game perspective, Journal of Public Economic Theory 12(4), 763-787.
Kennedy, P.W., (1994) Equilibrium pollution taxes in open economies with imperfect competition, Journal of Environmental Economics and Management 27, 49-63.
Roelfsema, H., (2007) Strategic delegation of environmental policy making, Journal of Environmental Economics and Management 53, 270-275.