Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/24183
Authors: 
Breitscheidel, Jörg
Year of Publication: 
2005
Series/Report no.: 
ZEW Discussion Papers 05-87
Abstract: 
We consider the application of self-financing tax/subsidy mechanisms in environmental regulation and explore the question whether these mechanisms yield strong investment incentives in a market with many firms under Cournot competition. It turns out that the tax/subsidy mechanism with the announcement of the subsidy rate and the tax/subsidy mechanism with the announcement of the tax rate work for an arbitrary number of firms, which means that they yield strong incentives for investing in environmentally friendly technologies. The announcement of the subsidy rate is preferable for solving hold-up problems.
Subjects: 
Hold-up problems
Environmental regulation
Taxes and subsidies
Selffinancing mechanisms
Emission control
JEL: 
Q28
L50
D62
D43
Document Type: 
Working Paper

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