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論文提要
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This paper
considers the combination of pollution taxes and abatement subsidies when
some polluting firms procure their abatement goods and services from an
oligopolistic eco-industry. The regulator must here cope with two
simultaneous price distortions: one that comes from pollution and the other
which is caused by the eco-industry’s market power. In this context, we show
that taxing emissions while subsidizing polluters’ abatement efforts cannot
lead to first-best, but the opposite occurs provided it is the eco-industry’s
output which is subsidized. When public transfers also create distortions,
welfare can be higher if the regulator uses only an emission tax, but
subsidizing abatement suppliers while taxing emissions remains optimal when
the eco-industry is concentrated.
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