Environmental Regulation under Sequential Competition

Explore a seminar on environmental regulation in industries with sequential competition. Delve into the analysis of a polluting industry competing in a Stackelberg model, where emission fees are applied sequentially to the leader and follower. Examine the leader's output advantage, distinguishing between first-mover and cost advantage effects. Discover how environmental regulation impacts the leader's output advantage, particularly in asymmetric firm scenarios. Investigate the output inefficiencies that arise when regulators incorrectly assume simultaneous competition, and identify the conditions under which these inefficiencies are most significant. Consider extensions to the model, including inflexible emission fees, multiple leaders and followers, product differentiation, and scenarios where the follower holds a cost advantage.

Environmental Regulation under Sequential Competition, Ana Espinola-Arredondo