About polluting eco-industries: optimal provision of abatement goods and Pigouvian fees

Abstract

(2017). About polluting eco-industries: optimal provision of abatement goods and Pigouvian fees. Environmental Economics, 8(3), 46-61. doi:10.21511 In this article, the authors introduce a polluting eco-industry. Depending on the level of damage, there are two optimal equilibria. If the damage is low, one generalizes the usual results of the economic literature to the polluting eco-industry: the dirty firm partially abates their emissions, only efficient eco-industry firms produce and the abatement level increases with the damage. However, very specific results are obtained if the damage is high. In this case, not all efficient eco-industry firms produce. The abatement level and the number of active eco-industry firms both decrease as the damage increases. The authors finally show that a well-designed Pigouvian tax implements these equilibria in a competitive economy.

On Outsourced Abatement Services: Market Power and Efficient Regulation

“…A discussion about the emergence of an eco-industry related to the fact that κ (0) > 0 can be found inCanton, Soubeyran, and Stahn (2008).5 If the marginal damage at zero is high enough and/or the marginal abatement cost is not too excessive, the end-of-pipe pollution assumption, i.e., E = max {ε(Q) − A, 0}, can lead to an efficient allocation requiring full abatement (seeSans, Schwartz, and Stahn (2017) for a discussion).…”