Environmental outcomes in a model of mixed duopoly

Rupayan Pal and Bibhas Saha

No 30, University of East Anglia Applied and Financial Economics Working Paper Series from School of Economics, University of East Anglia, Norwich, UK.

Abstract: We show under general demand and cost conditions that in a mixed duopoly with pollution the government will implement the socially optimal outputs and abatements by a tax-subsidy scheme and keeping the public fi rm fully public. The scheme requires taxing outputs and subsidizing abatements at diff erent 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 partly 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 (search for similar items in EconPapers)
Date: 2011-11-07
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Citations: View citations in EconPapers (1)

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