Environmental taxes in a differentiated mixed duopoly
Beladi and Chao (2006) and Bárcena-Ruiz and Garzón (2006) considered the role of environmental policy on the decision whether to privatize a public firm in different market structures. This paper re-examines whether privatization improves (or deteriorates) the environment in a mixed duopolistic framework with differentiated product and pollution abatement. It is shown that, due to privatization, less attention is paid to pollution abatement by all the firms coupled with less environment taxes levied by the government in a differentiated duopoly, and the environment is more (less) damaged when the product is less (more) substitutable. When the product is highly substitutable, industry profits increase because this softens the intensity of the product market, but social welfare deteriorates accompanied with the path of privatization because the loss of consumer surplus and tax revenue exceeds the increases in profits, even if the environment is less damaged.
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Volume (Year): 33 (2009)
Issue (Month): 4 (December)
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- Beladi, Hamid & Chao, Chi-Chur, 2006. "Does privatization improve the environment?," Economics Letters, Elsevier, vol. 93(3), pages 343-347, December.
- Juan Bárcena-Ruiz & María Garzón, 2006.
"Mixed Oligopoly and Environmental Policy,"
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Springer, vol. 8(2), pages 139-160, June.
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- Juan Carlos Bárcena-Ruiz & María Begoña Garzón, 2002. "Environmental taxes and strategic delegation," Spanish Economic Review, Springer, vol. 4(4), pages 301-309.
- Xiangkang Yin, 2003. "Corrective Taxes under Oligopoly with Inter-Firm Externalities," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 26(2), pages 269-277, October.
- Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
- Kazuhiko Kato, 2006. "Can Allowing to Trade Permits Enhance Welfare in Mixed Oligopoly?," Journal of Economics, Springer, vol. 88(3), pages 263-283, 09.
- 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.
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