Controlling non-point source pollution in Cournot oligopolies with hyperbolic demand

Akio Matsumoto () and Ferenc Szidarovszky ()
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Akio Matsumoto: Chuo University
Ferenc Szidarovszky: Corvinus University

SN Business & Economics, 2021, vol. 1, issue 2, 1-15

Abstract: Abstract This paper constructs an n-firm Cournot oligopoly in which the price function is hyperbolic. It provides a game-theoretic approach to characterize the ambient charge’s impact on NPS pollution’s total and individual emission levels. The main findings are as follows: (1) the positivity of individual Cournot output depends on the marginal production cost, the average abatement technology and the number of firms in the industry; (2) the ambient charge is effective for controlling the total amount of NPS pollution when the average marginal production cost is less than the average emission coefficient; (3) the ambient charge is also effective for controlling the individual pollution when the tax rate and the average pollution level are sufficiently high; (4) assuming hyperbolic rather than linear demand, stronger parametric conditions are necessary for the effectiveness of the ambient charge.

Keywords: Non-point source pollution; Ambient charge; Hyperbolic price function; Nonlinear best reply (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s43546-020-00023-8

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