The switching effect of environmental taxation within Bertrand differentiated duopoly
We investigate second-best optimal taxation of the polluting variety of a product in a Bertrand duopoly with differentiated varieties. The analysis provides novel insight on a useful social function of environmental regulation. Besides internalizing the environmental externality, the taxation of the polluting variety improves the matching of consumers and product varieties, and so creates a socially desirable business switching between the differentiated varieties.
Year of publication: |
2011
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Authors: | Kurtyka, Oliwia ; Mahenc, Philippe |
Published in: |
Journal of Environmental Economics and Management. - Elsevier, ISSN 0095-0696. - Vol. 62.2011, 2, p. 267-277
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Publisher: |
Elsevier |
Keywords: | Bertrand competition Differentiated products Environmental taxation Green demand Ramsey rule |
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