[en] Highlights: • We analyse the relationship between competition and ''green'' innovation. • We examine an oligopoly with pollution where firms compete and invest in ''green'' R&D. • We analyse the optimal emission tax set by a committed regulator. • An inverted-U relationship exists between R&D and the number of firms. - Abstract: We examine the relationship between competition and innovation in an industry where production is polluting and R&D has the aim to reduce emissions (''green'' innovation). We present an n-firm oligopoly where firms compete in quantities and decide their investment in ''green'' R&D. We analyse the case where the emission tax is set endogenously by a committed regulator and uncover an inverted-U relationship between innovation and competition that is mainly driven by the presence of R&D spillovers.

[en] We use a supply-demand approach to value energy products exposed to emission cost uncertainty. We find closed form solutions for a number of popularly traded energy derivatives such as: forwards, European call options written on spot prices and European Call options written on forward contracts. Our modeling approach is to first construct noisy supply and demand processes and then equate them to find an equilibrium price. This approach is very general while still allowing for sensitivity analysis within a valuation setting. Our assumption is that, in the presence of emission costs, traditional supply growth will slow down causing output prices of energy products to become more costly over time. However, emission costs do not immediately cause output price appreciation, but instead expose individual projects, particularly those with high emission outputs, to much more extreme risks through the cost side of their profit stream. Our results have implications for hedging and pricing for producers operating in areas facing a stochastic emission cost environment.

No abstract available

No abstract available

[en] Output-based refunding of environmental policy revenues combines a tax on emissions with a production subsidy, typically in a revenue-neutral fashion. With imperfect competition, subsidies can alleviate output underprovision. However, when market shares are significant, endogenous refunding reduces abatement incentives and the marginal net tax or subsidy. If market shares differ, marginal abatement costs will not be equalized, and production is shifted among participants. In an asymmetric Cournot duopoly, endogenous refunding leads to higher output, emissions, and overall costs compared with a fixed rebate program targeting the same emissions intensity. These results hold whether emissions rates are determined simultaneously with output or strategically in a two-stage model. (author)

[en] This article presents a combined economic-political model of environmental taxation setting. The model introduces a third lobby group - the lobby of an eco-industry - in addition to the traditional lobbies of polluting firms and environmentalists. Pressure groups interact to influence the environmental tax chosen by a regulator maximizing its chances of being reelected. The eco-industry lobby adds a new political contribution toward a higher environmental tax. The imperfectly competitive structure of the eco-industry also modifies the incentives of the usual lobbies. When the foreign environmental policy is constant, environmentalists can be in favor of a decrease in the local tax in order to reduce foreign pollution. We also discuss the formation of alliances between the eco-industry and one of the other lobbies and their potential impact. In general, the impact of lobbying activities on the politically optimal tax is ambiguous and depends on the relative concentration of each pressure group. (author)

[en] The relative advantages of the tools for the environmental protection have been assessed in the article. From the economical point of view emission taxes, subsidies for abatement of emissions, and market-based permit system are more preferable in comparison with the control and management systems. The control of emissions for each organization can be achieved only in case when the marginal costs of abatement for each pollutant are known, which is unlikely in practice. In case of immiscible pollution, the determination of the marginal costs of organizations to control emissions is not required only for permitting schemes, which gives them an advantage over other tools. The least expensive for achieving a particular purpose in the fight against pollution is the tool of minimum technological requirements for the protection of the environment. The long-term effect of the instrument depends on the net income effect and the effect of technological innovation. Subsidy schemes or alternative methods of initial distribution of market permits at the expense of positive effects of income can increase the size of the industry, which is undesirable from the ecological point of view. In order to neutralize this effect, the organizations of the subsidized industry may be obliged to make one-time payments, the amount of which is the total cost of subsidies. The second way is the induced impact on the pace of technological innovation. Control and management tools have weak incentives for innovation. An emissions tax (or emission control subsidy) will encourage environmentally sound innovation. In the market scheme, emission reductions reduce taxes. Pollution control instruments have different consequences for the distribution of income in the economy and the competitiveness of the economy. (paper)

[en] This paper studies the influence of free trade agreements on national environmental policies and location strategies of polluting firms. It is shown that banning export subsidies makes relocation of production more attractive for firms. When export subsidies are banned relocation is profitable because: (1) the rival firm reduces output due to more stringent emission regulation in the host country of the investment and (2) relocation leads to lower emission tax rate in the original home country of the investing firm. When export subsidies are used, the first effect is absent because the host government is able to use the export subsidy to compensate the negative effect of more stringent emission taxation on domestic shareholders. (author)

[en] Highlights: • The optimal tax depends on the difference between social and private shadow prices of pollution stock. • The optimal tax is time-consistent in the short run and in the long run. • With constant marginal damages, the optimal tax is constant. • With increasing marginal damages, the optimal tax depends on the pollution stock and abatement capacity. • The steady state in both cases is globally stable. - Abstract: This paper characterizes the optimal tax rule to regulate a polluting monopoly when the firm has the possibility of investing in an abatement technology and the environmental damages are caused by a stock pollutant. The optimal policy is given by the stagewise feedback Stackelberg equilibrium of a dynamic policy game between a regulator and a monopolist. The regulator playing as the leader chooses an emission tax to maximize net social welfare, and the monopolist acting as the follower selects the output and the investment in abatement technology to maximize profits. We find that the optimal tax has two components. The first component is negative and equal to the gap between the marginal revenue and the price caused by the firm market power; the second component is given by the difference between the social and private shadow prices of the pollution stock. Considering a linear-quadratic model we show that if marginal environmental damages are constant, the difference between social and private shadow prices is positive and the optimal policy consists of taxing emissions at a constant rate if the marginal damages are large enough. However, if the marginal environmental damages are increasing the numerical exercises carried out show that this difference is negative at the steady state and the optimal policy gives the firm a subsidy when approaching the steady state regardless of the importance of the environmental damages. This result is explained by the negative effect that abatement technology accumulation has on the tax. Finally, it can be pointed out that although both models yield different predictions about the sign of the optimal policy the dynamics is globally stable for both cases.

[en] The profits made in 2005 by oil companies is enormous and results from the important and continuous rise of the oil barrel price. However, this high price has led to an inflation of automotive and space heating fuel prices which has penalized the end-users. These end-users have also contributed in this way to the excellent financial results of oil companies. Therefore, this proposal of law aims at establishing a pay-back system to end-users as soon as the profits of oil companies exceed a given threshold. (J.S.)