Isaac Scientific Publishing

Frontiers in Management Research

The Impact of Environmental Standards as a Public Environmental Policy Tool on the Market Structure of Polluting Industries

Download PDF (313.5 KB) PP. 85 - 95 Pub. Date: July 19, 2017

DOI: 10.22606/fmr.2017.13001


  • Luciano Fanti
    Department of Economics and Management, University of Pisa, Italy
  • Domenico Buccella*
    Department of Economics, Kozminski University in Warsaw, Poland


This paper investigates the effects of public environmental policies on the market structure in a Cournot context. It is shown that when the Government fixes upper limits to emissions, higher environmental social concerns favour entry of a firm. On the other hand, the abatement technology may act as a barrier or an incentive to entry depending on the government’s environmental sensitiveness; however, a more efficient technology tends to disfavour entry. In addition, if the size of the fixed costs is relatively high, the duopoly market structure will lead to social welfare level lower than in the presence of monopoly. On the other hand, an improvement of the efficiency of the abatement technology may, in the presence of a low social interest for controlling pollution, play the role of a barrier to entry. The empirical and policy implications of these results are discussed.


Environmental policies; entry; cournot; endogenous market structure


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