This　study　reveals　that　the　environmental　tax　gets　less　stringent　when　the　manufacturer＇s　distribution　channel　becomes　more　decentralized.　Contrary　to　the　classic　double　marginalization　problem,　the　first　implication　is　that　a　monopolistic　manufacturer　benefits　from　decentralization　when　its　technology　is　sufficiently　polluting.　Secondly,　with　two　competing　manufacturers,　both　are　more　likely　to　decentralize　in　equilibrium　when　their　technologies　are　more　polluting.　Under　certain　conditions,　decentralized　manufacturers　may　enjoy　higher　profits　thanks　to　tax　cuts　without　affecting　social　welfare　or　consumer　surplus.　Various　extensions　of　the　base　models　confirm　the　robustness　of　the　analytical　results.　©　2017　Elsevier　Ltd