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Endogenous timing in private and mixed duopolies with emission taxes

Author

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  • Sang-Ho Lee

    (Chonnam National University)

  • Lili Xu

    (Dalian Maritime University)

Abstract

This paper examines an endogenous timing game in product differentiated duopolies under price competition when emission tax is imposed on environmental externality. We show that a simultaneous-move (sequential-move) outcome can be an equilibrium outcome in a private duopoly under significant (insignificant) environmental externality, but this result can be reversed in a mixed duopoly. We also show that when environmental externalities are significant, public leadership yields greater welfare than private leadership, and that public leadership is more robust than private leadership as an equilibrium outcome. Finally, we find that privatization can result in a public leader becoming a private leader, but this worsens welfare.

Suggested Citation

  • Sang-Ho Lee & Lili Xu, 2018. "Endogenous timing in private and mixed duopolies with emission taxes," Journal of Economics, Springer, vol. 124(2), pages 175-201, June.
    • Handle: RePEc:kap:jeczfn:v:124:y:2018:i:2:d:10.1007_s00712-017-0565-1
    DOI: 10.1007/s00712-017-0565-1
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    as
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    More about this item

    Keywords

    Emission tax; Endogenous timing; Mixed duopoly; Private duopoly;
    All these keywords.

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • D6 - Microeconomics - - Welfare Economics
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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