Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96816
Authors: 
Antoniou, Fabio
Strausz, Roland
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4788
Abstract: 
We study (energy) markets with dirty incumbents and costly entry by clean producers. For intermediate entry costs, the market outcome exhibits inefficient production and inefficient entry. A policy mix of three popular regulatory instruments—taxation on polluters, feed-in tariffs for clean entrants, and taxation of consumption—cannot correct these two market failures. Feed-in tariffs and consumption taxes are ineffective instruments for implementing the first best. The second best requires feed-in tariffs or consumption taxes. For a given level of production, the instruments are ineffective in influencing the overall budget, but may be effective for other budgetary concepts.
Subjects: 
taxation
feed-in tariffs
externalities
entry
pollution
JEL: 
D21
D61
H23
Document Type: 
Working Paper

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