The first essay of this dissertation analyzes the claim that a Marshallian total surplus
optimum characterizes a second-best Pareto optimum in a general equilibrium model with
price makers. The main result of this essay is that a Marshallian total surplus optimum
corresponds to a second-best Pareto optimum when (i) the consumer's preferences are
quasi-linear with respect to a numeraire, and (ii) for all other markets except the one
under consideration, first-best (or Paretian) optimality conditions are satisfied.
The second essay characterizes the optimal regulatory policy for point-source pollution
emissions when firms are competing in Cournot fashion in the product market and have
private information about their own cost. It is shown that the optimal regulatory policy
benefits from the strategic interaction between the firms in the output market even
though the firms' private information is uncorrelated. The firms strategic interaction in
the output market acts as an information correlation externality that mitigates the wellknown
"rent-extraction efficiency" trade-off. Each firms' opportunity to over-report their
costs is reduced because the output market's strategic interaction reduces the profitability
of infra-marginal units if they do. The main result shows that optimal environmental
regulations discriminate between firms of given industry. Moreover, it is shown that if
the regulator believes that firm A is always more likely to be efficient than firm B (in
the sense of first-order stochastic dominance) and that both firms are equally efficient ex
post, then firm A faces a higher marginal tax than its competitor. In light of this result,
it is argued that the model provides theoretical foundations for grandfather clauses in
environmental regulations. / Arts, Faculty of / Vancouver School of Economics / Graduate
| Identifer | oai:union.ndltd.org:UBC/oai:circle.library.ubc.ca:2429/11066 |
| Date | 11 1900 |
| Creators | Duhamel, Marc |
| Source Sets | University of British Columbia |
| Language | English |
| Detected Language | English |
| Type | Text, Thesis/Dissertation |
| Format | 4347946 bytes, application/pdf |
| Rights | For non-commercial purposes only, such as research, private study and education. Additional conditions apply, see Terms of Use https://open.library.ubc.ca/terms_of_use. |
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