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We study the effect of a shock on firms’ costs in a general setting by considering both perfect and imperfect competition and a general cost function. We show that, counterintuitively, firms’ profits may increase with cost increases. We generalize Seade’s (1985) results by considering the...
Persistent link: https://www.econbiz.de/10011753255
Under imperfect competition, the effect of a cap-and-trade system on indus- try profits depends on the type of abatement technology that is used by firms: industries that use process-integrated technologies are more affected than those using end-of-pipe abatement technologies. The interaction...
Persistent link: https://www.econbiz.de/10011753250
This paper analyzes the long-term investment decisions of firms that are regulated by an emissions tax and that perceive a degree of market power in their respective output markets. Firms invest in abatement equipment that is fixed over the medium term (e.g., buying a new generator). This paper...
Persistent link: https://www.econbiz.de/10011753251
The present paper addresses two policy objectives that the environmental regulator aims to accomplish: to implement a market for permits and make regulation acceptable for businesses. Profit-neutral permit allocations are defined as the number of permits that the regulator should give for free...
Persistent link: https://www.econbiz.de/10011753288
Faced with the widespread use of dismantling sites in Asia, whose processes present alarming health and environmental issues, the European Commission has raised the question of implementing a financial mechanism to encourage shipowners to use higher standards for ship recycling. This mechanism...
Persistent link: https://www.econbiz.de/10012140955