| By: |
Pascale Combes Motel (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique);
Bocar Samba Ba (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique);
Sonia Schwartz (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: |
Rare earth elements extraction induces pollution and the balance problem. In
this article, we investigate how far recycling and environmental taxation
challenge both questions. In a two-period framework, we assume a monopoly
extractor in the first period that is in competition with one recycler in the
second period. Our results depend on whether the recycling activity is bounded
or not by extracted quantities. When recycling is not constrained, it does not
change extraction in period 1 but has pro-competitive effects in period 2. The
balance problem favors recycling in period 2 and reduces environmental damages
in both periods. If recycling is limited, the extractor adopts a foreclosure
strategy in the first period. The balance problem reduces extraction in both
periods but also recycling. A second-best environmental taxation enables to
reach the first-best outcome except in the second period of the bounded case.
Environmental taxes have to be amended in order to take into account the
recycling effect. They are never equal to the marginal damage. |
| Keywords: |
Rare earth elements,Pollution,Balance problem,Recycling,Taxation,Cournot competition |
| Date: |
2019–03–13 |
| URL: |
http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02065976&r=all |