مالیات آلودگی تعادلی در یک اقتصاد باز دو صنعتی

This paper involves strategic implications of environmental policy in case of two international oligopolies when countries take part in an international environmental agreement and have agreed on national target levels for a global pollutant. This set-up permits an analysis of the design of optimal emission taxes across domestic producers. By differentiating taxes between industries with different abatement cost, demand, and number of domestic firms, governments are in a position to raise national net foreign rents. It is argued that a single national emission trading programme encompassing all domestic producers cannot provide the equivalent strategic policy design.

In these years whether the relative level of environmental policy stringency has a major impact on the competitiveness of countries is being intensely discussed among industrialists, politicians and researchers. Although numerous empirical studies suggest little or no impact (see e.g. Jaffe et al., 1995; Beghin and Potier, 1997), recent empirical work finds that for many pollutants marginal abatement cost curves are fairly flat over a long range of environmental quality levels but eventually begin to rise steeply as emissions are increasingly reduced (Steininger, 1994). Therefore, impacts of environmental costs on competitiveness are likely to increase in the future in cases where environmental requirements are expected to rise. This issue is most relevant in the wake of the global warming treaty in Kyoto in Japan, where industrialized countries are committed to legally binding national limits on greenhouse gas emissions. The concern among policymakers for trade implications of prospective environmental measures may influence on the design of environmental policy across domestic sectors. Evidence for such trade strategic considerations in practice already appears from the discounts and exemptions in CO2 taxes given in a number of European countries to CO2 pollution-intensive sectors, such as chemicals, minerals and oil-refining. Also the widespread application of the so-called voluntary agreements between industries and authorities in Germany and the Netherlands gives scope for a purposeful design of emission requirements across sectors in order to minimize impacts on competitiveness when a national environmental target level is implemented.1 From a global perspective this development is of concern since it may have serious distortionary effects on allocations of trade and environmental resources. In order to focus on this issue, the following analysis is concerned with sector-specific strategic environmental policy between two countries which participate in an international environmental agreement to reduce emissions of a pollutant harming the global environment. There has been considerable theoretical work on the competitive impacts of environmental policy. An important field of analysis develops variants of the standard strategic trade policy framework to model national environmental policy in open economies when there is a strategic element to international trade (see Ulph (1994) for a survey). The models employed keep the basic assumption from the trade policy framework of Spencer and Brander (1983) (see Brander (1995) for a survey), of two firms each located in a separate country. The firms are in international competition and, prior to production decisions, their respective non-cooperative governments set environmental standards or taxes knowing that their policy affects production in both countries. For this reason strategic interactions between the governments arise. These analyses address a number of relevant policy issues and provide a broad understanding of the market structures in which dumping of environmental requirements to production processes may occur for trade-related goals. Conclusions reached in models with a sole domestic producer only relate to real-world situations where major differences in cost and market structures among domestic producers are absent. When such differences are present however, governments may have an incentive to differentiate environmental requirements. As mentioned above, the strategic design of environmental policy across sectors already plays a part in real policy. The paper focuses on the optimal design of emission taxes at the national level across industries under a binding exogenous target level for total national emission. This could be taken as a simplified model of the situation between industrialized countries taking part in the Kyoto treaty, which they intend to implement by means of emission taxes. In the analysis the structure of decisions is a two-stage game in which the two governments, each seeking to maximize total national profits, simultaneously choose per-unit tax rates on emission for each of their two domestic industries in stage one. In stage two, producers take the tax rates as given and compete in Cournot fashion in two separate duopolistic third markets. This game is solved for a perfect Nash equilibrium. In an equivalent two-stage game with exogenously given target levels and with only one international duopolistic market there would be no strategic element to international trade. Governments would intervene only to regulate their single producer to implement the national target level.2 In contrast, it turns out that in the game below governments have an incentive to act strategically by differentiating tax rates in the two markets. By tax differentiation governments can raise national net foreign rents in the two markets, because the changes in foreign rents caused by a weaker tax rate are different for the domestic industries when costs, demand and the number of firms in the market are different. For this reason non-cooperative governments will shift the tax burden away from the market with the relative highest rent capture potential. Having shown this result in the following analysis, the question that arises is what characterizes markets with a `high’ rent capture potential. Some considerations concerning this issue are subsequently provided. The structure of the paper is as follows. Section 2 presents the model and basic assumptions for the analysis. Section 3 derives Nash–Cournot industry equilibria in the two markets. In Section 4 emission taxes set in the non-cooperative equilibrium are derived and compared to the tax rates set in the non-strategic equilibrium in which governments ignore all rent-capture potential. The effects of introduced asymmetries are succeedingly examined. Section 5 concludes.