Asymmetric Regulation of Identical Polluters in Oligopoly Models

Studies of optimal second-best environmental regulation of identical polluting agents have invariably ignored potentially welfare-improving asymmetric regulation by imposing equal regulatory treatment of identical firms at the outset. Yet, cost asymmetry between oligopoly firms may well give rise to...

Full description

Saved in:
Bibliographic Details
Published in:Environmental & resource economics 2005, Vol.30 (1), p.35-48
Main Authors: Nannerup, Niels, AMIR, Rabah
Format: Article
Language:English
Subjects:
asymmetric emissions regulation
Carbon dioxide
Cost control
Economic models
Economic theory
Emission standards
Environment
Environmental economics
Environmental policy
Environmental regulations
EU harmonization
European Union
Greenhouse effect
Oligopoly
polluting oligopolists
Pollution
Pollution control
Regulation
Studies
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Studies of optimal second-best environmental regulation of identical polluting agents have invariably ignored potentially welfare-improving asymmetric regulation by imposing equal regulatory treatment of identical firms at the outset. Yet, cost asymmetry between oligopoly firms may well give rise to private as well as social gains. A trade-off is demonstrated for the regulator, between private costs savings and additional social costs when asymmetric treatment is allowed. Asymmetry is indeed optimal for a range of plausible parameter values. Further, it is demonstrated that for a broad class of abatement cost functions, there is scope for increasing welfare while keeping both total output and total emission constant. Some motivating policy issues are discussed in light of the results, including international harmonization and global carbon dioxide reduction. Copyright Springer 2005
ISSN:0924-6460
1573-1502
DOI:10.1007/s10640-004-1044-z