Environmental taxes and industry monopolization

Lambert Schoonbeek, Frans P. de Vries*

*Bijbehorende auteur voor dit werk

OnderzoeksoutputAcademicpeer review

13 Citaten (Scopus)
25 Downloads (Pure)


This paper considers a market with an incumbent monopolistic firm and a potential entrant. Production by both firms causes polluting emissions. The government selects a tax per unit of emission to maximize social welfare. The size of the tax rate affects whether or not the potential entrant enters the market. We identify the conditions that create a market structure where the preferences of the government and the incumbent firm coincide. Interestingly, there are cases where both the government and incumbent firm prefer a monopoly. Hence, the government might induce profitable monopolization by using a socially optimal tax policy instrument.

Originele taal-2English
Pagina's (van-tot)94-106
Aantal pagina's13
TijdschriftJournal of Regulatory Economics
Nummer van het tijdschrift1
StatusPublished - aug.-2009

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