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Environmental outcomes in a model of mixed duopoly

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Author Info

  • Rupayan Pal

    (Indira Gandhi Institute for Development Research)

  • Bibhas Saha

    (School of Economics, University of East Anglia)

Abstract

We show under general demand and cost conditions that in a mixed duopoly with pollution the government will implement the socially optimal outputs and abatements by a tax-subsidy scheme and keeping the public fi rm fully public. The scheme requires taxing outputs and subsidizing abatements at diff erent rates, unlike a pollution tax. Our result contradicts some of the recent claims that social optimum is not implementable and privatization is necessary. We also show that when the private firm is partly foreign-owned, the government will adopt some privatization and will not implement the social optimum, though the social optimum is implementable.

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Bibliographic Info

Paper provided by School of Economics, University of East Anglia, Norwich, UK. in its series University of East Anglia Applied and Financial Economics Working Paper Series with number 030.

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Date of creation: 07 Nov 2011
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Handle: RePEc:uea:aepppr:2011_30

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Postal: Norwich NR4 7TI
Phone: 44 1603 591131
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Web page: http://www.uea.ac.uk/eco/
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Postal: Helen Chapman, School of Economics, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, UK
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Related research

Keywords: environmental damage; mixed duopoly; privatization; tax-subsidy scheme; foreign firm;

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References

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  1. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December.
  2. Paolo, COLLA & Marc, GERMAIN & Vincent, VAN STEENBERGHE, 2005. "Environmental policy and speculation on markets for emission permits," Discussion Papers (ECON - Département des Sciences Economiques) 2005049, Université catholique de Louvain, Département des Sciences Economiques.
  3. Ulph, Alistair, 1996. "Environmental Policy and International Trade when Governments and Producers Act Strategically," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 265-281, May.
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  5. 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.
  6. Bibhas Saha, 2009. "Mixed ownership in a mixed duopoly with differentiated products," Journal of Economics, Springer, vol. 98(1), pages 25-43, September.
  7. Susumu Cato, 2008. "Privatization and the Environment," Economics Bulletin, AccessEcon, vol. 12(19), pages 1-10.
  8. Jung, Chulho & Krutilla, Kerry & Boyd, Roy, 1996. "Incentives for Advanced Pollution Abatement Technology at the Industry Level: An Evaluation of Policy Alternatives," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 95-111, January.
  9. 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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  14. repec:ebl:ecbull:v:12:y:2008:i:19:p:1-10 is not listed on IDEAS
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  16. Juan Bárcena-Ruiz & María Garzón, 2006. "Mixed Oligopoly and Environmental Policy," Spanish Economic Review, Springer, vol. 8(2), pages 139-160, June.
  17. Kumar, Ashutosh & Saha, Bibhas, 2008. "Spatial competition in a mixed duopoly with one partially nationalized firm," Journal of Comparative Economics, Elsevier, vol. 36(2), pages 326-341, June.
  18. Juan Carlos Bárcena-Ruiz & María Begoña Garzón, 2002. "Environmental taxes and strategic delegation," Spanish Economic Review, Springer, vol. 4(4), pages 301-309.
  19. Wang, Leonard F.S. & Wang, Jean, 2009. "Environmental taxes in a differentiated mixed duopoly," Economic Systems, Elsevier, vol. 33(4), pages 389-396, December.
  20. Glenn Jenkins & RANJIT LAMECH, 1992. "Fiscal Policies To Control Pollution: International Experience," Development Discussion Papers 1992-01, JDI Executive Programs.
  21. Leonard F. S. Wang & Ya-chin Wang & Lihong Zhao, 2009. "Privatization and the Environment in a Mixed Duopoly with Pollution Abatement," Economics Bulletin, AccessEcon, vol. 29(4), pages 3112-3119.
  22. Antelo, Manel & Loureiro, Maria L., 2009. "Asymmetric information, signaling and environmental taxes in oligopoly," Ecological Economics, Elsevier, vol. 68(5), pages 1430-1440, March.
  23. Joan Canton & Antoine Soubeyran & Hubert Stahn, 2008. "Environmental Taxation and Vertical Cournot Oligopolies: How Eco-industries Matter," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(3), pages 369-382, July.
  24. White, Mark D., 1996. "Mixed oligopoly, privatization and subsidization," Economics Letters, Elsevier, vol. 53(2), pages 189-195, November.
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