Secondary materials, Pigouvian taxes, and a monopsony
Secondary materials present promising opportunities for firms to repurpose emissions into marketable goods, aligning with circular economy principles. This paper examines conditions under which introducing a market for secondary materials can completely replace Pigouvian emissions taxes. These conditions prove highly restrictive: positive Pigouvian emissions taxes remain necessary unless secondary materials prices immediately reach unrealistically high levels. We propose that the socially optimal budget-neutral policy is to subsidize secondary materials prices while taxing uncontrolled emissions. Further, we extend the analysis to a two-firm framework where a data center supplies residual heat to a district heating firm acting as a monopsony buyer. This extension explicitly models the demand for residual heat and explores how subsidies and emissions taxes align firm incentives with the social optimum in the absence of competitive markets.
Code (0)
등록된 구현이 없습니다.
Methods 이 논문이 사용한 방법론
Similar Papers 제목 키워드 기반
Beyond Pigouvian Taxes: A Worst Case Analysis
In the early $20^{th}$ century, Pigou observed that imposing a marginal cost tax on the usage of a public good induces a socially efficient level of use as an equilibrium. Unfortunately, such a "Pigouvian" tax may also i…
Misinformation as Information Pollution
Social media feed algorithms are designed to optimize online social engagements for the purpose of maximizing advertising profits, and therefore have an incentive to promote controversial posts including misinformation. …
MisinformationMinimum Wages in Concentrated Labor Markets
Economists increasingly refer to monopsony power to reconcile the absence of negative employment effects of minimum wages with theory. However, systematic evidence for the monopsony argument is scarce. In this paper, I p…
Taxes and Market Power: A Principal Components Approach
Suppliers of differentiated goods make simultaneous pricing decisions, which are strategically linked. Because of market power, the equilibrium is inefficient. We study how a policymaker should target a budget-balanced t…
Reducing residential emissions: carbon pricing vs. subsidizing retrofits
In this paper, we compare different mitigation policies when housing investments are irreversible. We use a general equilibrium model with non-homothetic preferences and an elaborate setup of the residential housing and …