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Mixed duopoly and environment

  • Rupayan Pal

    ()

    (Indira Gandhi Institute of Development Research)

  • Bibhas Saha

    ()

    (University of East Anglia)

We show under general demand and cost conditions that in a mixed duopoly with pollution the government can (and will) implement the socially optimal outputs and abatements by a tax-subsidy scheme and keeping the public firm fully public. The scheme requires taxing outputs and subsidizing abatements at different rates, unlike a pollution tax. Our result contradicts some of the recent claims that social optimum is not implementable and privatization is necessary. We also show that when the private firm is foreign-owned, the government will adopt some privatization and will not implement the social optimum, though the social optimum is implementable.

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File URL: http://www.igidr.ac.in/pdf/publication/WP-2011-005.pdf
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Paper provided by Indira Gandhi Institute of Development Research, Mumbai, India in its series Indira Gandhi Institute of Development Research, Mumbai Working Papers with number 2011-005.

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Length: 41 pages
Date of creation: Jan 2011
Date of revision:
Handle: RePEc:ind:igiwpp:2011-005
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  1. White, Mark D., 1996. "Mixed oligopoly, privatization and subsidization," Economics Letters, Elsevier, vol. 53(2), pages 189-195, November.
  2. Wang, Leonard F.S. & Wang, Jean, 2009. "Environmental taxes in a differentiated mixed duopoly," Economic Systems, Elsevier, vol. 33(4), pages 389-396, December.
  3. Leonard F. S. Wang & Ya-chin Wang & Lihong Zhao, 2009. "Privatization and the Environment in a Mixed Duopoly with Pollution Abatement," Economics Bulletin, AccessEcon, vol. 29(4), pages 3112-3119.
  4. PAOLO COLLA & MARC GERMAIN & VINCENT Van STEENBERGHE, 2012. "Environmental Policy and Speculation on Markets for Emission Permits," Economica, London School of Economics and Political Science, vol. 79(313), pages 152-182, 01.
  5. Juan Bárcena-Ruiz & María Garzón, 2006. "Mixed Oligopoly and Environmental Policy," Spanish Economic Review, Springer, vol. 8(2), pages 139-160, June.
  6. Juan Carlos Bárcena-Ruiz & María Begoña Garzón, 2002. "Environmental taxes and strategic delegation," Spanish Economic Review, Springer, vol. 4(4), pages 301-309.
  7. Paul Lehmann, 2012. "Justifying A Policy Mix For Pollution Control: A Review Of Economic Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 26(1), pages 71-97, 02.
  8. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December.
  9. de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-11, April.
  10. van 't Veld, Klaas & Hutchinson, Emma, 2009. "Excessive spending by firms to avoid accidents: Is it a concern in practice?," International Review of Law and Economics, Elsevier, vol. 29(4), pages 324-335, December.
  11. Tohru Naito & Hikaru Ogawa, 2009. "Direct versus indirect environmental regulation in a partially privatized mixed duopoly," Environmental Economics and Policy Studies, Society for Environmental Economics and Policy Studies - SEEPS, vol. 10(2), pages 87-100, June.
  12. Susumu Cato, 2008. "Privatization and the Environment," Economics Bulletin, AccessEcon, vol. 12(19), pages 1-10.
  13. Steven Shavell, 2010. "The Corrective Tax versus Liability As Solutions to the Problem of Harmful Externalities," NBER Working Papers 16235, National Bureau of Economic Research, Inc.
  14. repec:ebl:ecbull:v:12:y:2008:i:19:p:1-10 is not listed on IDEAS
  15. Alan Collins & Richard I. D. Harris, 2002. "Does Plant Ownership Affect the Level of Pollution Abatement Expenditure?," Land Economics, University of Wisconsin Press, vol. 78(2), pages 171-189.
  16. Silva, Emilson C.D. & Zhu, Xie, 2009. "Emissions trading of global and local pollutants, pollution havens and free riding," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 169-182, September.
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