Environmental policy and endogenous market structure

Annicchiarico, Barbara; Correani, Luca; Di Dio, Fabio

doi:10.1016/j.reseneeco.2018.02.003

Environmental policy and endogenous market structure

Author(s)

Annicchiarico, Barbara

Correani, Luca

Di Dio, Fabio

Date Issued

2018

Type

article

Volume

52

Issue

14

Start Page

186

End Page

215

DOI

10.1016/j.reseneeco.2018.02.003

ISSN

2610931

9287655

Journal

RESOURCE AND ENERGY ECONOMICS

Abstract

© 2018 Elsevier B.V. This paper presents a simple dynamic general equilibrium model with supply-side strategic interactions to study the economic effects of mitigating greenhouse gas emissions in an economy with an emission cap and oligopolistic firms competing on prices. With such endogenous market structure a gradual decarbonization policy is likely to induce higher markups, while the number of active firms displays a U-shaped behavior, first decreasing and then increasing. In the long run more firms are active, but they transfer a part of the compliance cost to households by charging a higher markup. The negative effects on the level of economic activity of this anti-competitive outcome are strongly mitigated by recycling policies.

Handle

http://hdl.handle.net/2067/42919

File(s)

Name

ENV_POL_MARKT__STRUCTURE__REE (2).pdf

Size

4.27 MB

Format

Adobe PDF

Checksum (MD5)

6ad395778b5b8bc7f20608575e288b17

Conference(s)

CEIS RESEARCH PAPERS

RESOURCE AND ENERGY ECONOMICS