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N° 120 |
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| Issue 4 2009 |
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| Alcoa re-Revisited: Recycling, Market Power and Environmental Policy |
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Jean De Beir
Guillaume Girmens |
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| This article incorporates an environmental dimension into the study of markets characterised by producers of a primary good in a position of market power over a sector of recycling. In the model used, production of the primary good by a monopolistic firm is polluting, whereas production of the recycled good is not. Taxing the monopolistic firm allows to reduce pollution, at the price of a reduction in the total quantity of good produced. The effect of a subsidy for recycling depends on the slopes of the demand curve and of the recycler's supply curve. It is ambiguous in terms of welfare, but it always encourages recycling. |
Abstract
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| Recycling; market power; environmental externalities; environmental policy |
Keywords |
| D42; D62; H23; Q53 |
JEL classification |
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