Partial privatization and unidirectional transboundary pollution
AbstractWe determine whether or not a local regional government should privatize its local public firm in a mixed duopoly when it faces the problem of unidirectional transboundary pollution. We consider two regions in an economy, one located upstream and the other, downstream. Where both the local public firm owned by the local government upstream and the private firm are located and compete upstream, we analyze two cases: (h) the private firm is owned by private investors upstream and (f) it is owned by private investors downstream. A comparison of the two cases presents the following results. Partial privatization is desirable for local welfare upstream in (h), but it is not always desirable in (f). In both (h) and (f), it is desirable for local welfare downstream and for the overall welfare of the economy when the degree of environmental damage and the fraction of transboundary pollution upstream are low. However, when they are high, the results change for (h) and (f).
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 27155.
Date of creation: 02 Dec 2010
Date of revision:
Mixed Duopoly; Privatization; Transboundary pollution;
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
- R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Production Analysis, and Firm Location - - - Government Policy; Regulatory Policy
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