IDEAS home Printed from https://ideas.repec.org/a/now/jnlsbe/102.00000042.html

Regulating Environmental Externalities through Public Firms: A Differential Game

Author

Listed:
  • Dragone, Davide
  • Lambertini, Luca
  • Palestini, Arsen

Abstract

We investigate the possibility of using public firms to regulate polluting emissions in a Cournot oligopoly where production generates pollution and public firms are less efficient than private ones. In a differential game we compare (i) the Markov-Perfect Nash equilibrium under social planning; (ii) the Markov Perfect Nash equilibrium in a mixed setup where public firms coexist with profit-seeking agents; (iii) the Cournot-Nash game among profit-seeking firms. In a mixed market, profit-seeking firms internalize the externality generated by production, and social welfare is the highest. We conclude that the creation of a mixed market can be desirable for the regulation of environmental externalities.

Suggested Citation

  • Dragone, Davide & Lambertini, Luca & Palestini, Arsen, 2014. "Regulating Environmental Externalities through Public Firms: A Differential Game," Strategic Behavior and the Environment, now publishers, vol. 4(1), pages 15-40, April.
    • Handle: RePEc:now:jnlsbe:102.00000042
    DOI: 10.1561/102.00000042
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1561/102.00000042
    Download Restriction: no
    File URL: https://libkey.io/10.1561/102.00000042?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Using public firms to regulate the environment
      by Economic Logician in Economic Logic on 2011-04-29 19:46:00

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. M. Fadaee, 2011. "A Dynamic Approach to the Environmental Effects of Trade Liberalization," Working Papers wp746, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. D. Dragone & L. Lambertini & A. Palestini, 2017. "Emission taxation, green innovations and inverted-U aggregate R&D efforts in a linear state oligopoly game," Working Papers wp2000, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. Flavio Delbono & Luca Lambertini, 2016. "Nationalization as Credible Threat Against Collusion," Journal of Industry, Competition and Trade, Springer, vol. 16(1), pages 127-136, March.
    4. F. Delbono & L. Lambertini, 2014. "Nationalization as credible threat against tacit collusion," Working Papers wp972, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. Dragone, Davide & Lambertini, Luca & Palestini, Arsen, 2022. "Emission taxation, green innovations and inverted-U aggregate R&D efforts in a linear state differential game," Research in Economics, Elsevier, vol. 76(1), pages 62-68.
    6. L. Lambertini, 2014. "On the Interplay between Resource Extraction and Polluting Emissions in Oligopoly," Working Papers wp976, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. F. Delbono & L. Lambertini, 2014. "Optimal firm' mix in oligopoly with twofold environmental externality," Working Papers wp955, Dipartimento Scienze Economiche, Universita' di Bologna.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:now:jnlsbe:102.00000042. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lucy Wiseman (email available below). General contact details of provider: http://www.nowpublishers.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.