Abstract
The presence of nonzero conjectural variations in pollution abatement and output make emission taxes less effective with respect to reducing emissions. This has implications for the characterization of the optimal emission tax, particularly in an international context where there are large asymmetries in pollution intensities. A higher degree of collusion in output between polluting firms results in higher emissions taxes in the non-cooperative equilibrium. In contrast, a higher degree of collusion in abatement between polluting firms results in lower emissions taxes in the non-cooperative equilibrium. These results rely on the presence of nonzero conjectural variations and large asymmetries in pollution intensities across countries. The analysis is relevant to the design of international environmental policy, including cases where countries face increasing global competition and damages from rising global emissions.
Description
This article is available under the Creative Commons CC-BY-NC-SA license (https://creativecommons.org/licenses/). Note that non-commercial reuse of it is according to the terms and conditions of the Creative Commons license which permits use, distribution and reproduction in any medium, provided the original work is properly cited. Copyright © The Author(s), 2021. Published by Cambridge University Press
Publisher
Cambridge University Press
Date of publication
6-2021
Language
english
Persistent identifier
http://hdl.handle.net/10950/4154
Document Type
Article
Recommended Citation
Gautier, Luis, "The role of nonzero conjectural variation in pollution abatement and output in the design of emission taxes" (2021). Economics Faculty Publications and Presentations. Paper 4.
http://hdl.handle.net/10950/4154
Publisher Citation
Gautier, L. (2022). The role of nonzero conjectural variation in pollution abatement and output in the design of emission taxes. Environment and Development Economics, 27(2), 184-207. doi:10.1017/S1355770X21000127