Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
We examine a polluting industry, competing à la Stackelberg, facing emission fees. We evaluate the leader's output advantage, disentangling two effects: the first-mover and cost advantage. We show that environmental regulation decreases the leader's output advantage; a reduction that is emphasized when pollution is more severe, but ameliorated by the leader's cost efficiency. We also measure the fee and welfare inefficiency arising if the regulator incorrectly assumes that the industry competes simultaneously, identifying in which settings this inefficiency is the largest. Our extensions consider investment in abatement, several leaders and followers, firm-specific emission fees, differentiated products, and a follower's cost advantage.