ABSTRACT
Again, the relative size of outputs depends on the sign of ð�2t þ V � c� αþ 3βÞ. The result is consistent with the findings in Section 3.1. Ceteris paribus, higher pollution tax will lead to lower output, or sCO�i > s
LO� i implies q
CO� ik < q
It can be calculated that with coordinated pollution tax, the market price of liner services precisely reflects the social cost, so that PCO�i ¼ cþ αþ β. In addition, the relative size of liner service prices under the two pollution taxes again depends on the sign of ð�2t þ V � c� αþ 3βÞ since
PCO�i � PLO�i ¼ 2ð20ninj þ 18ni þ 21nj þ 18Þð�2t þ V � c� αþ 3βÞ
3ð32ninj þ 35ni þ 35nj þ 36Þ ; (13)
which again simply states that if sCO�i > s LO� i , then P
CO� i > P
LO� i . It means a higher
pollution tax will lead to a higher price of liner service.
