EURO-Online login
- New to EURO? Create an account
- I forgot my username and/or my password.
- Help with cookies
(important for IE8 users)
262. Technological and Market Response to Environmental Taxation by a Competitive Industry
Invited abstract in session WC-24: Game Theory in Sustainable Supply Chains, stream Sustainable Supply Chains.
Wednesday, 12:30-14:00Room: 83 (building: 116)
Authors (first author is the speaker)
| 1. | Dmitry Krass
|
| Rotman School of Mgmt, University of Toronto | |
| 2. | Anton Ovchinnikov
|
| School of Business, Queen's University |
Abstract
We consider response to environmental taxation by competing heterogenous firms producing a commodity good with a polluting by-product (e.g., CO2). Firms are heterogeneous with respect to production efficiency and have a choice of finite types of pollution control technologies. Firms are faced with fixed plus linear production costs. Cournot competition is assumed. The key research question is the extent to which environmental taxes can be used to induce ``green equilibrium ' i.e., an equilibrium where all firms select the most environmentally efficient technology. We show that, in general, neither existence nor uniqueness of equilibria are guaranteed and characterize market demand functions under which existence does hold. However, even in this case, the equilibrium may include firms using less environmentally efficient technology choice at any level of environmental taxes. Thus, environmental taxation alone cannot reliably induce green technology choice. However, when coupled with fixed-cost subsidies, both existence and uniqueness of the green equilibrium are shown to hold.
Keywords
- Sustainable Development
- Environmental Management
- OR in Environment and Climate change
Status: accepted
Back to the list of papers