Environmental Taxation and International Eco-Industries
Date
01.01.2007
01.01.2007
Authors
Joan Canton
JEL Code
D62,H23,F12
D62,H23,F12
Keywords:
Eco-Industry,Strategic Environmental Policy,Asymmetric Oligopolies
Eco-Industry,Strategic Environmental Policy,Asymmetric Oligopolies
Publisher
Climate Change and Sustainable Development
Climate Change and Sustainable Development
Editor
Carlo Carraro
Carlo Carraro
Environmental policies are discussed when two countries differ in their ability to abate pollution. Northern eco-industries (the industry supplying abatement activities) are more efficient than Southern ones. Segmented environmental markets and a Northern monopoly yield identical second-best taxes in both countries. When markets are global, Southern countries underestimate the market power of eco-industries. Introducing competition creates positive (resp. negative) rent-shifting distortions in South (resp. North). Cooperation could reduce Northern pollution but has ambiguous consequences in South.