Mixed duopoly and environment

Rupayan Pal and Bibhas Saha

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: We show under general demand and cost conditions that in a mixed duopoly with pollution the government can (and will) implement the socially optimal outputs and abatements by a tax-subsidy scheme and keeping the public firm fully public. The scheme requires taxing outputs and subsidizing abatements at different rates, unlike a pollution tax. Our result contradicts some of the recent claims that social optimum is not implementable and privatization is necessary. We also show that when the private firm is foreign-owned, the government will adopt some privatization and will not implement the social optimum, though the social optimum is implementable.

Keywords: Environmental damage; mixed duopoly; privatization; tax-subsidy scheme; foreign firm (search for similar items in EconPapers)
JEL-codes: H23 L13 L33 Q50 Q58 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2011-01
New Economics Papers: this item is included in nep-cis and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Mixed Duopoly and Environment (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ind:igiwpp:2011-005

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