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Environmental tax policy and optimal privatization in a polluting mixed duopoly

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  • Mingqing Xing
  • Tingting Tan
  • Xuejun Ma
  • Xia Wang

Abstract

We investigate the optimal privatization policy in a polluting mixed duopoly when environmental taxes are used. Firms adopt clean technology to reduce emissions. We consider the situation of exogenous tax and find that (i) partial privatization is always optimal under low marginal damage, while full nationalization may be optimal under high marginal damage; (ii) the optimal privatization level always increases with tax rate under low marginal damage, while it may decrease with tax rate under high marginal damage. As an extension, we consider the endogenous tax situation and show that full nationalization may be optimal under sufficiently high marginal damage.

Suggested Citation

  • Mingqing Xing & Tingting Tan & Xuejun Ma & Xia Wang, 2023. "Environmental tax policy and optimal privatization in a polluting mixed duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(6), pages 3016-3025, September.
    • Handle: RePEc:wly:mgtdec:v:44:y:2023:i:6:p:3016-3025
    DOI: 10.1002/mde.3860
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    References listed on IDEAS

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