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Privatization and environmental pollution in a mixed duopoly

Author

Listed:
  • Jiancai Pi

    (Nanjing University, School of Business, Nanjing, China)

  • Li Yang

    (Nanjing University, School of Business, Nanjing, China)

  • Yu Zhou

    (Nanjing University, School of Business, Nanjing, China)

Abstract

This paper establishes mixed duopoly game-theoretical models to investigate the economic impacts exerted by privatization in the presence of the environmental pollution. When the residents’ environmental preference is introduced to the public firm’s objective function, we mainly find that privatization may increase the public firm’s output, decrease the private firms’ outputs, and exert no impacts on social welfare. These findings run contrast to the common findings of the studies on privatization. Moreover, Cournot competition and Stackelberg competition are separately analyzed to show that our findings are robust and irrelevant with the firms’ moves. This paper highlights the role the environmental pollution and residents’ environmental preference play in determining the economic impacts exerted by privatization.

Suggested Citation

  • Jiancai Pi & Li Yang & Yu Zhou, 2013. "Privatization and environmental pollution in a mixed duopoly," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 31(2), pages 163-192.
  • Handle: RePEc:rfe:zbefri:v:31:y:2013:i:2:p:163-192
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    privatization; mixed duopoly; environmental pollution; residents’ environmental preference; Cournot competition; Stackelberg competition;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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