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Endogenous timing in private and mixed duopolies with emission taxes

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Listed:
  • Lee, Sang-Ho
  • Xu, Lili

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

  • Lee, Sang-Ho & Xu, Lili, 2017. "Endogenous timing in private and mixed duopolies with emission taxes," MPRA Paper 80342, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:80342
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    References listed on IDEAS

    as
    1. Wang, Leonard F.S. & Wang, Jean, 2009. "Environmental taxes in a differentiated mixed duopoly," Economic Systems, Elsevier, vol. 33(4), pages 389-396, December.
    2. Rabah Amir & Giuseppe Feo, 2014. "Endogenous timing in a mixed duopoly," International Journal of Game Theory, Springer;Game Theory Society, vol. 43(3), pages 629-658, August.
    3. Clò, Stefano & Ferraris, Matteo & Florio, Massimo, 2017. "Ownership and environmental regulation: Evidence from the European electricity industry," Energy Economics, Elsevier, vol. 61(C), pages 298-312.
    4. Yuanzhu Lu & Sougata Poddar, 2009. "Endogenous Timing In A Mixed Duopoly And Private Duopoly –‘Capacity‐Then‐Quantity’ Game: The Linear Demand Case," Australian Economic Papers, Wiley Blackwell, vol. 48(2), pages 138-150, June.
    5. Xu, Lili & Cho, Sumi & Lee, Sang-Ho, 2016. "Emission tax and optimal privatization in Cournot–Bertrand comparison," Economic Modelling, Elsevier, vol. 55(C), pages 73-82.
    6. Yoshihiro Tomaru & Kazuharu Kiyono, 2010. "Endogenous Timing in Mixed Duopoly with Increasing Marginal Costs," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(4), pages 591-613, December.
    7. Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, vol. 2(1), pages 29-46, March.
    8. Tamás Balogh & Attila Tasnádi, 2012. "Does timing of decisions in a mixed duopoly matter?," Journal of Economics, Springer, vol. 106(3), pages 233-249, July.
    9. John S. Heywood & Guangliang Ye, 2009. "Privatisation And Timing In A Mixed Oligopoly With Both Foreign And Domestic Firms," Australian Economic Papers, Wiley Blackwell, vol. 48(4), pages 320-332, December.
    10. Fjell, Kenneth & Heywood, John S., 2004. "Mixed oligopoly, subsidization and the order of firm's moves: the relevance of privatization," Economics Letters, Elsevier, vol. 83(3), pages 411-416, June.
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    13. Rupayan Pal & Bibhas Saha, 2014. "Mixed Duopoly and Environment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(1), pages 96-118, February.
    14. Toshihiro Matsumura & Akira Ogawa, 2014. "Corporate Social Responsibility or Payoff Asymmetry? A Study of an Endogenous Timing Game," Southern Economic Journal, John Wiley & Sons, vol. 81(2), pages 457-473, October.
    15. Shuichi Ohori, 2006. "Optimal Environmental Tax and Level of Privatization in an International Duopoly," Journal of Regulatory Economics, Springer, vol. 29(2), pages 225-233, March.
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    18. Yuanzhu Lu, 2006. "Endogenous Timing in a Mixed Oligopoly with Foreign Competitors: the Linear Demand Case," Journal of Economics, Springer, vol. 88(1), pages 49-68, June.
    19. Xu, Lili & Lee, Sang-Ho, 2015. "Strategic Privatization With Tariffs And Environmental Taxes In An International Mixed Duopoly," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 56(1), pages 135-154, June.
    20. Pal, Rupayan & Saha, Bibhas, 2015. "Pollution tax, partial privatization and environment," Resource and Energy Economics, Elsevier, vol. 40(C), pages 19-35.
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    23. Beladi, Hamid & Chao, Chi-Chur, 2006. "Does privatization improve the environment?," Economics Letters, Elsevier, vol. 93(3), pages 343-347, December.
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    26. repec:ebl:ecbull:v:12:y:2008:i:19:p:1-10 is not listed on IDEAS
    27. Hong-Ren Din & Chia-Hung Sun, 2016. "Combining the endogenous choice of timing and competition version in a mixed duopoly," Journal of Economics, Springer, vol. 118(2), pages 141-166, June.
    28. Toshihiro Matsumura & Akira Ogawa, 2010. "On The Robustness Of Private Leadership In Mixed Duopoly," Australian Economic Papers, Wiley Blackwell, vol. 49(2), pages 149-160, June.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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