Optimal emission tax with endogenous location choice of duopolistic firms

Arbeitspapier

This paper explores optimal environmental tax policy under which duopoly firms strategically choose the location of their plants in a simple three-stage game. We examine how the relationship between the optimal emission tax and the choice of location of duopoly firms affects the welfare of the home country. We characterize the relationship between the optimal emission tax and the fixed cost, depending on the degree of environmental damage from production. Finally, we show the existence of asymmetric equilibrium in which either firm chooses relocation of its plant even if the duopoly firms are identical ex ante.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 2010,6

Classification and Topics

• Classification: Wirtschaft ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Oligopoly and Other Imperfect Markets
• Subject: Environmental policy ; Relocation ; Welfare ; Ökosteuer ; Optimale Besteuerung ; Betriebliche Standortwahl ; Duopol ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ikefuji, Masako ; Itaya, Jun-ichi ; Okamura, Makoto
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/43470
• Last update: 10.03.2025, 11:45 AM CET