Privatization and environmental pollution in a mixed duopoly

Jiancai Pi, Li Yang and Yu Zhou
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Li Yang: Nanjing University, School of Business, Nanjing, China
Yu Zhou: Nanjing University, School of Business, Nanjing, China

Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, 2013, vol. 31, issue 2, 163-192

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.

Keywords: privatization; mixed duopoly; environmental pollution; residents’ environmental preference; Cournot competition; Stackelberg competition (search for similar items in EconPapers)
JEL-codes: H21 L33 Q58 (search for similar items in EconPapers)
Date: 2013
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