Discussion Paper No.2404
Abstract :
In this study, we consider how an environmental policy controls NPS
(non-point source) pollution when the standard environmental policies
cannot be applied since the regulator is unable to observe individual emis-
sion levels of NPS pollution. In Cournot competition, the …rms determine
the optimal output and abatement technology levels to maximize their
pro…ts, taking the environmental tax rate as given. It is analytically and
numerically demonstrated that the ambient charge tax rate can control the
total size of NPS pollution under various circumstances, such as duopoly
or oligopoly, with or without product di¤erentiation when the …rms are
homogeneous or heterogeneous.
Keywords: NPS pollution, Ambient charge, Cournot oligopoly com-
petition, Homogeneity, Heterogeneity.