2011 Fiscal Year Final Research Report
Environmental Taxation and Productivity of Industries : Heterogeneity of Production Technologies, Entry and Exit
| Project/Area Number |
22730194
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| Research Category |
Grant-in-Aid for Young Scientists (B)
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| Allocation Type | Single-year Grants |
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| Research Field |
Applied economics
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| Research Institution | Nagoya University |
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Principal Investigator |
NAKADA Minoru 名古屋大学, 環境学研究科, 准教授 (50372545)
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| Project Period (FY) |
2010 – 2011
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| Keywords | 環境経済学 / 内生的成長理論 / 環境政策 / 生産性 / 参入退出 / 異質性 |
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| Research Abstract |
The main objective of this analysis is to analyze to the extent which environmental taxation affects productivity in detail. For that purpose, I introduce the heterogeneity in firms' production technologies and construct a general equilibrium model dealing with firms' entry and exit. Based on Melitz(2003), the model employs a distribution function of firms' productivity and constructs an endogenous growth model for analyzing the heterogeneity of firms. While fixed costs are given, the equilibrium cut-off point is derived where a firm's profit is zero and firms with minus profits should exit from the market. The introduction of environmental taxation increases the production costs of firms and only firms with higher productivity which cover such higher costs can continue their production. On the contrary, those with lower productivity have to exit from the market. If the introduction of the environmental taxation has an impact on the cut-off point to encourage the entry of firms with higher productivity and the exit of those with lower productivity, the environmental tax may have a positive impact on total factor productivity of industries. In this analysis, the heterogeneity in firms' production technologies is introduced for constructing a general equilibrium model dealing with firms' entry and exit.
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