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Monopoly Power and the Optimal Control of External Costs

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Authors
Burrows, Paul; Yohe, Gary
Issue Date
1988-03
Publisher
Seoul Journal of Economics
Citation
Seoul Journal of Economics 1 (No. 1 1988): 75-86
Keywords
monopolist; modified pigouvian; optimality; optimally control
Abstract
The extensive literature on production externalities has paid too little attention to the importance of controlling external costs when the generators of the externality exercise monopoly power in the goods market. What is more, the relatively few studies of this subject, found in the specialist environmental economics journals, appear to have reached an impasse. They have concluded that there is no single Pigouvian tax instrument that can achieve a socially optimal (efficient) level of the external cost, even if problems of information cost to the regulatory agency are ignored. In addition, the particular tax instrument that has previously been advocated will, in certain circumstances, involve the subsidization of the monopolist's efforts to reduce the external cost, while generating no revenue to finance the subsidy.
ISSN
1225-0279
Language
English
URI
http://hdl.handle.net/10371/832
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.01(1) (Spring 1988)
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