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Emission tax and optimal privatization in Cournot–Bertrand comparison

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  • Xu, Lili
  • Cho, Sumi
  • Lee, Sang-Ho

Abstract

We compare a Cournot with a Bertrand duopoly in a differentiated mixed market when both emission tax and privatization policies are used together. We find that the optimal emission tax is always lower than the marginal environmental damage, and it is always lower under Cournot than under Bertrand. We also find that the optimal privatization is always a partial privatization, and it is always higher under Cournot than under Bertrand. The socially optimal combinations of emission tax and privatization will damage the environment most, but Cournot yields lower environmental damage and social welfare than those under Bertrand. Finally, we show that the environmental damage is non-monotone in the level of privatization under both Cournot and Bertrand competitions.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:ecmode:v:55:y:2016:i:c:p:73-82
    DOI: 10.1016/j.econmod.2016.02.008
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. repec:ebl:ecbull:eb-18-00513 is not listed on IDEAS
    2. Xu, Lili & Lee, Sang-Ho, 2018. "The timing of environmental policies with excess burden of taxation in free-entry mixed markets," MPRA Paper 83560, University Library of Munich, Germany.
    3. Leal, Mariel & Garcia, Arturo & Lee, Sang-Ho, 2018. "Excess burden of taxation and environmental policy mix with a consumer-friendly firm," MPRA Paper 88256, University Library of Munich, Germany, revised 2018.
    4. repec:kea:keappr:ker-20171231-33-2-03 is not listed on IDEAS
    5. repec:eee:reveco:v:51:y:2017:i:c:p:444-454 is not listed on IDEAS
    6. Xu, Lili & Lee, Sang-Ho, 2018. "Corporate Social Responsibility and Environmental Taxation with Endogenous Entry," MPRA Paper 86398, University Library of Munich, Germany.
    7. Garcia, Arturo & Leal, Mariel & Lee, Sang-Ho, 2018. "A new irrelevance result in an endogenous timing with a consumer-friendly public firm," MPRA Paper 85648, University Library of Munich, Germany.
    8. repec:kap:jeczfn:v:124:y:2018:i:2:d:10.1007_s00712-017-0565-1 is not listed on IDEAS
    9. repec:eee:reveco:v:56:y:2018:i:c:p:538-546 is not listed on IDEAS
    10. Garcia, Arturo & Leal, Mariel & Lee, Sang-Ho, 2018. "Time-inconsistent environmental policies with a consumer-friendly firm: tradable permits versus emission tax," MPRA Paper 86407, University Library of Munich, Germany.
    11. 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.
    12. Lee, Sang-Ho & Nakamura, Tamotsu & Park, Chul-Hi, 2017. "Optimal Privatization Policy in a Mixed Eco-Industry in the Presence of Commitments on Abatement Technologies," MPRA Paper 80902, University Library of Munich, Germany.
    13. repec:eee:reveco:v:55:y:2018:i:c:p:68-77 is not listed on IDEAS
    14. Garcia, Arturo & Leal, Mariel & Lee, Sang-Ho, 2018. "Endogenous timing with a socially responsible firm," MPRA Paper 83968, University Library of Munich, Germany.

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