Partial cross-ownership and strategic environmental policy |
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Authors: | Juan Carlos Bá rcena-Ruiz,Marí a Luz Campo |
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Affiliation: | Departamento de Fundamentos del Análisis Económico I, Facultad de Ciencias Económicas y, Empresariales, Universidad del País Vasco, Avenida Lehendakari Aguirre 83, 48015 Bilbao, Spain |
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Abstract: | This paper analyzes the effect of passive investment in rival firms on the setting of cooperative and non-cooperative environmental taxes. We consider two firms located in different countries, with each firm owning the same percentage of the stock of its rival. We show that bilateral partial cross-ownership affects the taxes set by the countries in the cooperative and non-cooperative cases. When the stake that one firm has in its rival is great enough and environmental spillovers are low enough, cooperative taxes are lower than non-cooperative taxes. For the remaining values of parameters the opposite result is obtained. |
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Keywords: | Q58 F12 L13 |
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