Optimal pollution control in a mixed oligopoly with research spillovers

Shoji Haruna and Rajeev Goel

Australian Economic Papers, 2019, vol. 58, issue 1, 21-40

Abstract: We study optimal pollution abatement under a mixed oligopoly when firms engage in emissions‐reducing research and development (R&D) with imperfect appropriation. The regulator uses a tax to curb emissions. Results show that in a mixed oligopoly, the public firm has positive emissions reduction in equilibrium; however, emissions reductions of the private firm could be positive or zero. Under certain conditions, the optimal pollution tax is positive; otherwise, the tax reverts to a subsidy. Comparing mixed and private duopolies, privatisation leads to reductions in R&D and output, but to an increase in overall emissions, so privatisation tends to make the environment worse.

Date: 2019
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Citations: View citations in EconPapers (15)

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https://doi.org/10.1111/1467-8454.12138

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Working Paper: Optimal Pollution Control in a Mixed Oligopoly with Research Spillovers (2018)
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