Environmental effects of ambient charge in cournot oligopoly

Akio Matsumoto, Ferenc Szidarovszky and Masahiro Yabuta

Journal of Environmental Economics and Policy, 2018, vol. 7, issue 1, 41-56

Abstract: This paper investigates the effect caused by an increase in ambient charges on firm-specific and total pollutions in a Cournot oligopoly market. Formalising profit-maximising behaviour in the n-firm framework with product differentiation, we show the static result that ambient charge can reduce industrial pollution. We then demonstrate three dynamic results: the first that Cournot equilibrium can lose stability in the discrete-time framework if the number of the firms is greater than four, the second that it is always stable in the continuous-time framework and the third that stability can be switched to instability if a delay in production becomes large enough.

Date: 2018
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DOI: 10.1080/21606544.2017.1347527

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