Environmental Regulation and the Eco-Industry
Date
01.01.2005
01.01.2005
Authors
Bernard Sinclair-Desgagné, Maia David
JEL Code
H23,L13,Q58
H23,L13,Q58
Keywords:
Pollution regulation,End-of-pipe pollution abatement,Environment
Pollution regulation,End-of-pipe pollution abatement,Environment
Publisher
Climate Change and Sustainable Development
Climate Change and Sustainable Development
Editor
Carlo Carraro
Carlo Carraro
This paper re-examines environmental regulation, under the assumption that pollution abatement technologies and services are provided by an imperfectly competitive environment industry. It is shown that each regulatory instrument (emission taxes and quotas; design standards; and voluntary agreements) has a specific impact on the price-elasticity of the polluters’ demand for abatement services, hence on the market power of the eco-industry and the resulting cost of abatement. This implies that the optimal pollution tax will be higher than the marginal social cost of pollution, while a voluntary approach to pollution abatement may fail unless the eco-industry itself is willing to participate.