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Partial privatization and unidirectional transboundary pollution

Author

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  • Kato, Kazuhiko

Abstract

We determine whether or not a local regional government should privatize its local public firm in a mixed duopoly when it faces the problem of unidirectional transboundary pollution. We consider two regions in an economy, one located upstream and the other, downstream. Where both the local public firm owned by the local government upstream and the private firm are located and compete upstream, we analyze two cases: (h) the private firm is owned by private investors upstream and (f) it is owned by private investors downstream. A comparison of the two cases presents the following results. Partial privatization is desirable for local welfare upstream in (h), but it is not always desirable in (f). In both (h) and (f), it is desirable for local welfare downstream and for the overall welfare of the economy when the degree of environmental damage and the fraction of transboundary pollution upstream are low. However, when they are high, the results change for (h) and (f).

Suggested Citation

  • Kato, Kazuhiko, 2010. "Partial privatization and unidirectional transboundary pollution," MPRA Paper 27155, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:27155
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    File URL: https://mpra.ub.uni-muenchen.de/27155/1/MPRA_paper_27155.pdf
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    References listed on IDEAS

    as
    1. Wang, Leonard F.S. & Wang, Jean, 2009. "Environmental taxes in a differentiated mixed duopoly," Economic Systems, Elsevier, vol. 33(4), pages 389-396, December.
    2. Shuichi Ohori, 2006. "Trade liberalization, consumption externalities and the environment: a mixed duopoly approach," Economics Bulletin, AccessEcon, vol. 17(5), pages 1-9.
    3. Shuichi Ohori, 2006. "Optimal Environmental Tax and Level of Privatization in an International Duopoly," Journal of Regulatory Economics, Springer, vol. 29(2), pages 225-233, March.
    4. Toshihiro Matsumura, 2003. "Stackelberg Mixed Duopoly with a Foreign Competitor," Bulletin of Economic Research, Wiley Blackwell, vol. 55(3), pages 275-287, July.
    5. Yuanzhu Lu, 2006. "Endogenous Timing in a Mixed Oligopoly with Foreign Competitors: the Linear Demand Case," Journal of Economics, Springer, vol. 88(1), pages 49-68, June.
    6. Kenneth Fjell & Debashis Pal, 1996. "A Mixed Oligopoly in the Presence of Foreign Private Firms," Canadian Journal of Economics, Canadian Economics Association, vol. 29(3), pages 737-743, August.
    7. 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.
    8. Kazuhiko Kato, 2011. "Emission quota versus emission tax in a mixed duopoly," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 13(1), pages 43-63, January.
    9. Beladi, Hamid & Chao, Chi-Chur, 2006. "Does privatization improve the environment?," Economics Letters, Elsevier, vol. 93(3), pages 343-347, December.
    10. Tohru Naito & Hikaru Ogawa, 2009. "Direct versus indirect environmental regulation in a partially privatized mixed duopoly," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 10(2), pages 87-100, June.
    11. repec:ebl:ecbull:v:17:y:2006:i:5:p:1-9 is not listed on IDEAS
    12. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December.
    13. Nagase, Yoko & Silva, Emilson C.D., 2007. "Acid rain in China and Japan: A game-theoretic analysis," Regional Science and Urban Economics, Elsevier, vol. 37(1), pages 100-120, January.
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    15. Kazuhiko Kato, 2006. "Can Allowing to Trade Permits Enhance Welfare in Mixed Oligopoly?," Journal of Economics, Springer, vol. 88(3), pages 263-283, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Mixed Duopoly; Privatization; Transboundary pollution;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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