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Environmental taxes in a differentiated mixed duopoly


  • Wang, Leonard F.S.
  • Wang, Jean


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.

Suggested Citation

  • Wang, Leonard F.S. & Wang, Jean, 2009. "Environmental taxes in a differentiated mixed duopoly," Economic Systems, Elsevier, vol. 33(4), pages 389-396, December.
  • Handle: RePEc:eee:ecosys:v:33:y:2009:i:4:p:389-396

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    References listed on IDEAS

    1. John Vickers & George Yarrow, 1991. "Economic Perspectives on Privatization," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 111-132, Spring.
    2. 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.
    3. Juan Bárcena-Ruiz & María Garzón, 2006. "Mixed Oligopoly and Environmental Policy," Spanish Economic Review, Springer;Spanish Economic Association, vol. 8(2), pages 139-160, June.
    4. Goering, Gregory E., 2008. "Welfare impacts of a non-profit firm in mixed commercial markets," Economic Systems, Elsevier, vol. 32(4), pages 326-334, December.
    5. Juan Carlos Bárcena-Ruiz & María Begoña Garzón, 2002. "Environmental taxes and strategic delegation," Spanish Economic Review, Springer;Spanish Economic Association, vol. 4(4), pages 301-309.
    6. R. Simpson, 1995. "Optimal pollution taxation in a Cournot duopoly," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 6(4), pages 359-369, December.
    7. Xiangkang Yin, 2003. "Corrective Taxes under Oligopoly with Inter-Firm Externalities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(2), pages 269-277, October.
    8. Damania, D., 1996. "Pollution Taxes and Pollution Abatement in an Oligopoly Supergame," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 323-336, May.
    9. Beladi, Hamid & Chao, Chi-Chur, 2006. "Does privatization improve the environment?," Economics Letters, Elsevier, vol. 93(3), pages 343-347, December.
    10. Kazuhiko Kato, 2006. "Can Allowing to Trade Permits Enhance Welfare in Mixed Oligopoly?," Journal of Economics, Springer, vol. 88(3), pages 263-283, September.
    11. de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-311, April.
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    Cited by:

    1. Leal, Mariel & Garcia, Arturo & Lee, Sang-Ho, 2017. "Effects of globalizing a consumer-friendly firm into an asymmetric mixed duopoly," MPRA Paper 83512, University Library of Munich, Germany.
    2. Kazuhiko Kato, 2011. "Emission quota versus emission tax in a mixed duopoly," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 13(1), pages 43-63, January.
    3. Shuichi Ohori, 2012. "Environmental Tax and Public Ownership in Vertically Related Markets," Journal of Industry, Competition and Trade, Springer, vol. 12(2), pages 169-176, June.
    4. Leonard F.S. Wang & Jean Wang & Jen-Yao Lee, 2010. "Optimum-Welfare And Maximum-Revenue Tariffs In Mixed Oligopoly With Foreign Competitors," Australian Economic Papers, Wiley Blackwell, vol. 49(1), pages 60-72, March.
    5. repec:eee:reveco:v:51:y:2017:i:c:p:444-454 is not listed on IDEAS
    6. Tai-Liang Chen & Leonard Wang, 2010. "Trade liberalization and transboundary pollution in an international mixed duopoly," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 12(4), pages 187-200, December.
    7. Rupayan Pal & Bibhas Saha, 2011. "Environmental outcomes in a model of mixed duopoly," University of East Anglia Applied and Financial Economics Working Paper Series 030, School of Economics, University of East Anglia, Norwich, UK..
    8. Rupayan Pal & Bibhas Saha, 2010. "Does Partial Privatization Improve the Environment?," Working Papers id:3122, eSocialSciences.
    9. 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.
    10. repec:spr:jecfin:v:41:y:2017:i:2:d:10.1007_s12197-015-9346-2 is not listed on IDEAS
    11. 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.
    12. Pal, Rupayan & Saha, Bibhas, 2015. "Pollution tax, partial privatization and environment," Resource and Energy Economics, Elsevier, vol. 40(C), pages 19-35.
    13. Barbot, Cristina & Betancor, Ofelia & Socorro, M. Pilar & Viecens, M. Fernanda, 2014. "Trade-offs between environmental regulation and market competition: Airlines, emission trading systems and entry deterrence," Transport Policy, Elsevier, vol. 33(C), pages 65-72.
    14. Kazuhiko Kato, 2013. "Optimal degree of privatization and the environmental problem," Journal of Economics, Springer, vol. 110(2), pages 165-180, October.
    15. Kato, Kazuhiko, 2010. "Partial privatization and unidirectional transboundary pollution," MPRA Paper 27155, University Library of Munich, Germany.
    16. Ouchida, Yasunori & Goto, Daisaku, 2014. "Do emission subsidies reduce emission? In the context of environmental R&D organization," Economic Modelling, Elsevier, vol. 36(C), pages 511-516.
    17. Lee, Sang-Ho & Xu, Lili, 2017. "Endogenous timing in private and mixed duopolies with emission taxes," MPRA Paper 80342, University Library of Munich, Germany.
    18. Flores, Daniel & García, Arturo, 2016. "On the output and welfare effects of a non-profit firm in a mixed duopoly: A generalization," Economic Systems, Elsevier, vol. 40(4), pages 631-637.
    19. 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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