Dynamic Oligopoly with Capital Accumulation and Environmental Externality

Davide Dragone, Luca Lambertini () and Arsen Palestini ()
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Arsen Palestini: University of Bologna

A chapter in Dynamic Systems, Economic Growth, and the Environment, 2010, pp 197-214 from Springer

Abstract: Abstract We model the interplay between capital accumulation for production and environmental externalities in a differential oligopoly game with Ramsey dynamics. The external effect is determined, alternatively, by sales or production. While the externality does not affect the behaviour of profit-seeking firms, it may induce a benevolent planner to shrink sales as compared to the Cournot-Nash equilibrium because of a tradeoff between consumer surplus and the externality, if the latter is driven by sales. If instead it is determined by production, there emerges that the Ramsey golden rule is no longer socially optimal.

Keywords: Nash Equilibrium; Saddle Point; Capital Accumulation; Consumer Surplus; Social Welfare Function (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:spr:dymchp:978-3-642-02132-9_10

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DOI: 10.1007/978-3-642-02132-9_10

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