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| Author: | Simpson, R. |
| Title: | Optimal pollution taxation in a cournot duopoly |
| Journal: | Environmental and Resource Economics
1995 : DEC, VOL. 6:4, p. 359-369 |
| Index terms: | POLLUTION TAXATION DUOPOLY |
| Language: | eng |
| Abstract: | It is well known that the optimal pollution tax in a competitive industry is equal to the marginal damage inflicted by the pollution. It has also been shown that the optimal pollution tax on a monopoly is less than the marginal damage. In this paper, the author derives the optimal pollution tax for a Cournot duopoly. If firms have different production costs, the optimal tax rate may exceed the marginal damage. This is so because the tax may be an effective instrument for allocating production from the less to the more efficient firm. |
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