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Research article2018Peer reviewedOpen access

Environmental policy, technology adoption and the size distribution of firms

Coria, Jessica; Kyriakopoulou, Efthymia


The potential impacts of strict environmental policies on production costs and firms' competitiviness are central to the choice of which policy to implement. However, not all the industries nor all firms within an industry are affected in the same way. In this paper, we investigate the effects of emission taxes, uniform emission standards, and performance standards on the size distribution of firms. Our results indicate that, unlike emission taxes and performance standards, emission standards introduce regulatory asymmetries favoring small firms. On the contrary, emission taxes and performance standards reduce to a lower extent profits of larger firms but they do modify the optimal scale of firms. We also show that when the regulatory asymmetries created by emissions standards are taken into account, the profitability of emissions reducing technologies is higher under emission standards than under market-based instruments. (C) 2018 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (


Environmental regulations; Energy efficiency; Size distribution; Emission taxes; Emission standards; Performance standards

Published in

Energy Economics
2018, Volume: 72, pages: 470-485

    Sustainable Development Goals

    SDG7 Affordable and clean energy
    SDG8 Decent work and economic growth
    SDG9 Industry, innovation and infrastructure
    SDG12 Responsible consumption and production

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