Economics Of Environmental Policy In Oligopolistic Markets

With the rising public and political concern about greener production, there is unrelenting pressure on individual companies to mitigate and abate pollution and adopt cleaner technologies. Governments adopt several types of environmental policies and regulations that are aimed at protecting the environment and encouraging efficient use of natural resources. Instruments such as carbon tax, emission quota and abatement subsidy are being proposed and implemented in several countries. Such policies affect firms' strategic decision-making such as creating joint ventures, product differentiation, R&D, expansion and outsourcing. This book examines the relationship between firms' strategic decision making, environmental policies and its resulting effect on society. Each chapter builds a theoretical model in which the market structure is imperfect competition.

One of the central tenets of this book is that governmental policies must be designed to take into account market characteristics and environmental phenomena - simultaneously. This volume contains a new research effort of the `Fondazione Eni Enrico Mattei' and explores the theoretical underpinnings of environmental policy in a sub-optimal world. Topics considered link economic issues (oligopolistic market structures, firm heterogeneity, and the strategic behavior of governments) to environmental issues (emission abatements, cleaner technologies, and environmental taxation). The articles in this volume were chosen to achieve a balance between breadth and depth and were written by leading experts in the field. In short, this book is rich in policy implications and raises new issues and questions for future research.

This work asks why market instruments have not been used to their full potential in environmental policy. It uses a public choice perspective to analyse the political economy of environmental policy, emphasising the role of interest groups which have blocked the introduction of market instruments.

1. ENVIRONMENTAL POLICY ANALYSIS: WHAT AND WHY? Why environmental policy analysis? Environmental issues are growing in visibility in local, national, and world arenas, as a myriad of human activities leads to increased impacts on the natural world. Issues such as climate change, endangered species, wilderness protection, and energy use are regularly on the front pages of newspapers. Governments at all levels are struggling with how to address these issues. Environmental policy analysis is intended to present the environmental and social impacts of policies, in the hope that better decisions will result when people have better information on which to base those decisions. Conducting environmental policy analysis requires people who understand what it is and how to do it. Interpreting it also requires those skills. We hope that this book will increase the abilities, both of analysts and of decision-makers, to understand and interpret the impacts of environmental policies. Policy analysis books almost invariably begin by pointing out that policy analysis can take many forms. This book is no different. As you will see in Chapter 1, we consider policy analysis to be information provided for the policy process. That information can take many forms, from sophisticated empirical analysis to general theoretical results, from summary statistics to game theoretic strategies.

"A clear grasp of economics is essential to understanding why environmental problems arise and how we can address them. ... Now thoroughly revised with updated information on current environmental policy and real-world examples of market-based instruments .... The authors provide a concise yet thorough introduction to the economic theory of environmental policy and natural resource management. They begin with an overview of environmental economics before exploring topics including cost-benefit analysis, market failures and successes, and economic growth and sustainability. Readers of the first edition will notice new analysis of cost estimation as well as specific market instruments, including municipal water pricing and waste disposal. Particular attention is paid to behavioral economics and cap-and-trade programs for carbon."--Publisher's web site.

Emissions taxes, tradeable emission permits and voluntary compliance policies are becoming the instruments of choice in controlling environmental problems at the national and international level. This text uses research in order to appraise their efficiency in varying market conditions.

"Why have national governments created different international rules and institutions to address global environmental issues? Alexander Ovodenko argues that this variation can be explained by looking to a dynamic that has been thus far downplayed by the literature on global environmental governance: the structures of industries regulated by environmental rules. Regulating the Polluters inverts the literature on regulatory capture and collective action bypresenting empirical evidence of the irony of market power in global environmental politics" (ed.).

This comprehensive and accessible textbook addresses important relationships between economics and environmental policy, highlighting in particular the role of taxation. It also connects environmental policy to social accounting by describing how measures of welfare and sustainable development depend on whether policies successfully internalize market failures.