Environmental taxation and mergers in oligopoly markets with product differentiation |
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Authors: | Email author" target="_blank">Mahelet?G?FikruEmail author Luis?Gautier |
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Institution: | 1.Department of Economics,Missouri University of Science and Technology,Rolla,USA;2.Department of Social Sciences,University of Texas at Tyler,Tyler,USA |
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Abstract: | We analyze the effect of mergers on optimal environmental taxation in a Cournot oligopoly market with product differentiation. Our result indicates that the adjustment in emission tax crucially depends on the post-merger output distortion and pollution intensities. Specifically, we find that the optimal emission tax increases post-merger as long as pollution intensity of firms is higher and output distortion smaller post-merger than pre-merger. Furthermore, our result suggests that there is no need to revise environmental policy in markets where pollution intensity of firms does not change post-merger and (i) products are completely differentiated, or (ii) there are many firms for any degree of product differentiation. |
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