Environmental and Resource Economics

, Volume 59, Issue 3, pp 407–431 | Cite as

Multiproduct Firms and Environmental Policy Coordination

  • Juan Carlos Bárcena-Ruiz
  • María Begoña Garzón


The literature that analyzes the coordination of environmental taxes by governments considers that firms produce a single good at a single plant. However, in practice firms tend to produce several goods at various production plants (multiproduct firms). These firms may organize themselves in a centralized or decentralized fashion for purposes of decision-making: This affects their output and pollution levels. This paper sets out to analyze the coordination of environmental taxes considering multiproduct firms. We find that the organizational structure chosen by the owners of the firms depends on whether or not governments coordinate with one another in setting taxes, and on whether the goods produced are substitutes or complements. Social welfare is greater if a supranational authority sets taxes in all countries. In this case, joint welfare is never lower if the authority is constrained to set the same tax in all countries.


Environmental coordination Environmental tax International trade Multiproduct firms Oligopoly 

JEL Classification

L22 Q56 Q58 


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Copyright information

© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

  • Juan Carlos Bárcena-Ruiz
    • 1
  • María Begoña Garzón
    • 1
  1. 1.Departamento de Fundamentos del Análisis Económico IUniversidad del País VascoBilbaoSpain

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