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Pollution abatement and partial privatization

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  • Kadohognon Sylvain Ouattara

    (UR CONFLUENCE : Sciences et Humanités (EA 1598) - UCLy - UCLy (Lyon Catholic University), ESDES - ESDES, Lyon Business School - UCLy - UCLy - UCLy (Lyon Catholic University))

Abstract

This paper considers a mixed duopoly model where there are spillovers in environmental R&D. We adopt a three-stage game formulated by Haruna and Goel (2018) and investigate the impact of partial privatization on firm's investment in R&D and environmental taxes. We show that if the degree of privatization is relatively low and the spillover effect is significant, the private firm undertakes R&D and the government subsidizes emissions. Our model suggests that the government should never subsidize R&D when both firms invest in R&D. Furthermore, an increase in the degree of privatization is worse for the environment, but partial privatization increases social welfare.

Suggested Citation

  • Kadohognon Sylvain Ouattara, 2019. "Pollution abatement and partial privatization," Post-Print hal-05249010, HAL.
    • Handle: RePEc:hal:journl:hal-05249010
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