Pollution abatement and partial privatization

Kadohognon Sylvain Ouattara ()
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Kadohognon Sylvain Ouattara: UR CONFLUENCE : Sciences et Humanités (EA 1598) - UCLy - UCLy (Lyon Catholic University), ESDES - ESDES, Lyon Business School - UCLy - UCLy - UCLy (Lyon Catholic University)

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Abstract: This paper considers a mixed duopoly model where there are spillovers in environmental R&D. We adopt a three-stage game formulated by Haruna and Goel (2018) and investigate the impact of partial privatization on firm's investment in R&D and environmental taxes. We show that if the degree of privatization is relatively low and the spillover effect is significant, the private firm undertakes R&D and the government subsidizes emissions. Our model suggests that the government should never subsidize R&D when both firms invest in R&D. Furthermore, an increase in the degree of privatization is worse for the environment, but partial privatization increases social welfare.

Keywords: Partial privatization; Social welfare; Environmental R&D; Emissions fees; bien-être social; privatisation partielle; R&D environnementale; Redevances sur les émissions (search for similar items in EconPapers)
Date: 2019-08
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Published in Economics Bulletin, 2019, 39 (3), pp.1887-1897

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05249010

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