Mergers, pollution and environmental policy

Indrani, Roy Chowdhury (2006): Mergers, pollution and environmental policy.

Abstract

We examine the impact of abatement taxes on the pollution level in a duopoly framework with endogenous market structure. We demonstrate that an increase in abatement taxes could trigger a regime-switch from Cournot competition to merger, as well as from merger to Cournot competition. The nature of this switch is critically dependent on the nature of merger costs. However, in either case, this may cause the pollution level to increase.

• Item Type: MPRA Paper
• Language: English
• Keywords: Mergers, pollution, abatement tax, endogenous market structure
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics; 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; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture ; Natural Resources ; Energy ; Environment ; Other Primary Products

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