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Privatization and the Environment

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  • Susumu Cato

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    (Graduate School of Economics, University of Tokyo)

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    Abstract

    We investigate the privatization policy of an industry where the production process generates emissions. We show that the high degree of negative externality leads to production substitution from the public firm to private firms. Moreover, we show that, if the degree of negative externality is sufficiently high, then a mixed oligopoly is preferable to a pure oligopoly for social welfare, even if the number of firms in the market is large. Furthermore, we consider free entry of private firms.

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    File URL: http://www.accessecon.com/pubs/EB/2008/Volume12/EB-08L30002A.pdf
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    Bibliographic Info

    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 12 (2008)
    Issue (Month): 19 ()
    Pages: 1-10

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    Handle: RePEc:ebl:ecbull:eb-08l30002

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    Related research

    Keywords: production substitution;

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    1. Toshihiro Matsumura & Osamu Kanda, 2005. "Mixed Oligopoly at Free Entry Markets," Journal of Economics, Springer, Springer, vol. 84(1), pages 27-48, 02.
    2. de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-11, April.
    3. Kazuhiko Kato, 2006. "Can Allowing to Trade Permits Enhance Welfare in Mixed Oligopoly?," Journal of Economics, Springer, Springer, vol. 88(3), pages 263-283, 09.
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    Cited by:
    1. Kazuhiko Kato, 2013. "Optimal degree of privatization and the environmental problem," Journal of Economics, Springer, Springer, vol. 110(2), pages 165-180, October.
    2. Rupayan Pal & Bibhas Saha, 2011. "Environmental outcomes in a model of mixed duopoly," University of East Anglia Applied and Financial Economics Working Paper Series, School of Economics, University of East Anglia, Norwich, UK. 030, School of Economics, University of East Anglia, Norwich, UK..

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