Journal article
On Environmental Regulation of Oligopoly Markets: Emission versus Performance Standards
Environmental & resource economics, Vol.70(1), pp.147-167
05/01/2018
DOI: 10.1007/s10640-017-0114-y
Abstract
By specializing Montero's (J Environ Econ Manag 44:23-44, 2002) model of environmental regulation under Cournot competition to an oligopoly with linear demand and quadratic abatement costs, we extend his comparison of firms incentives to invest in R&D under emission and performance standards by solving for a closed form solution of the underlying two-stage game. This allows for a full comparison of the two instruments in terms of their resulting propensity for R&D and equilibrium industry output. In addition, we incorporate an equilibrium welfare analysis. Finally, we investigate a three-stage game wherein a welfare-maximizing regulator sets a socially optimal emission cap under each policy instrument. For the latter game, while closed-form solutions for the subgame-perfect equilibrium are not possible, we establish numerically that the resulting welfare is always larger under a performance standard.
Details
- Title: Subtitle
- On Environmental Regulation of Oligopoly Markets: Emission versus Performance Standards
- Creators
- Rabah Amir - University of IowaAdriana Gama - College of MexicoKatarzyna Werner - Manchester Metropolitan University
- Resource Type
- Journal article
- Publication Details
- Environmental & resource economics, Vol.70(1), pp.147-167
- Publisher
- Springer Nature
- DOI
- 10.1007/s10640-017-0114-y
- ISSN
- 0924-6460
- eISSN
- 1573-1502
- Number of pages
- 21
- Language
- English
- Date published
- 05/01/2018
- Academic Unit
- Economics
- Record Identifier
- 9984380458702771
Metrics
1 Record Views