Emission taxes, firm relocation, and product differentiation

This paper studies the effect of an emission tax on the relocation decision in a duopoly with vertical product differentiation. We establish the relationship between an exogenous product quality markup, relocation cost, and emission taxation in a two-country-setting for three cases: (a) an environmental tax set only by one country, (b) non-cooperative environmental taxation in both countries, and (c) coordinated environmental taxation. We show that a larger product quality markup and, thus, weaker competition can serve as a substitute for environmental policy as both reduce emissions. However, weaker competition makes firm relocation more likely, which results in emission shifting instead of emission reduction. The higher the product quality markup, the more likely it is that at least one firm relocates to the foreign country. Emission taxation in the foreign country changes location decisions: If also the foreign country applies an emission tax, at least one firm stays in the home country. If both governments set taxes non-cooperatively, the low-quality firm always stays in the home country. If both countries set taxes cooperatively, both firms are more likely to stay in the home country. However, relocation of the low-quality firm is a possible outcome under cooperative taxation.

Porter Hypothesis vs Pollution Haven Hypothesis: Can There Be Environmental Policies Getting Two Eggs in One Basket?

The Porter hypothesis and the pollution haven hypothesis seem to predict opposite reactions by firms facing environmental regulation, as the first invokes the arising of a win–win solution while the second envisages the possibility for firms to flee abroad. We illustrate the possibility of designing policies (taking the form of either emission taxation or environmental standards) able to eliminate firms’ incentives to relocate their plants abroad and create a parallel incentive for them to deliver a win–win solution by investing either in replacement technologies under emission taxation, or in abatement technologies under an environmental standard. This is worked out in a Cournot supergame in which firms may activate the highest level of collusion compatible with their intertemporal preferences.

Berth Allocation and Quay Crane Assignment for the Trade-off Between Service Efficiency and Operating Cost Considering Carbon Emission Taxation

To sustain the development of maritime transportation, “green ports,” which operate with a good balance between environmental impact and economic interests, have been the focus of port operators and government agencies and are required to look into energy saving and emission reduction initiatives. One such reduction strategy proposed by the International Maritime Organization suggested imposing a carbon emission tax on ports as a long-term solution to reduce carbon emissions, but this would definitely increase the operating cost of ports. Quay cranes (QCs), as one type of handling equipment, play an important role in the service efficiency and carbon emission of ports. Therefore, this paper makes an effort to explore the study of the integrated berth allocation and QC assignment problem with the consideration of carbon emission taxation. This problem is formulated as a biobjective integer programming model, aimed at minimizing the total completion delay of all tasks and the total operating costs for all QCs. Finally, numerical experiments are performed to assess the applicability of the proposed models and evaluate the efficiency of the developed solution algorithm.