Mixed Duopoly and Environment

Pal, Rupayan; Saha, Bibhas

doi:10.1111/jpet.12056

Cited by 36 publications

(28 citation statements)

References 16 publications

(21 reference statements)

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“…Furthermore, EU countries lead the development of environmental policies for the sustainability in a warming planet and have a non-negligible presence of public enterprises in energy-consuming industries such as transportation and automobile industries. More related descriptions can be found in Wang and Wang (2009), Pal and Saha (2014, 2015 and Xu, et al (2016). 3 Several researchers have recently analyzed the environmental concerns of a mixed market.…”

Section: Introductionmentioning

confidence: 99%

Endogenous timing in private and mixed duopolies with emission taxes

Lee

2017

J. Econ.

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This paper examines an endogenous timing game in product differentiated duopolies under price competition when emission tax is imposed on environmental externality. We show that a simultaneous-move (sequential-move) outcome can be an equilibrium outcome in a private duopoly under significant (insignificant) environmental externality, but this result can be reversed in a mixed duopoly. We also show that when environmental externalities are significant, public leadership yields greater welfare than private leadership, and that public leadership is more robust than private leadership as an equilibrium outcome. Finally, we find that privatization can result in a public leader becoming a private leader, but this worsens welfare.

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Section: Introductionmentioning

confidence: 99%

Endogenous timing in private and mixed duopolies with emission taxes

Lee

2017

J. Econ.

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“…2 On the other hand, considering tax-subsidy scheme that allows for the possibility of the tax on the output and the subsidy on the abatement to be different, in a homogeneous products mixed duopoly, Pal and Saha (2014) have shown that the government can implement the socially optimal output and abatement by keeping the public firm fully public. However, it is optimal for the government to partially privatize the public firm, unless the private firm is fully owned by a domestic party.…”

Section: Barcena-ruiz Andmentioning

confidence: 99%

Pollution tax, partial privatization and environment

Pal

Saha

2015

Resource and Energy Economics

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The full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-pro t purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. AbstractConsidering a differentiated mixed duopoly we show that when privatization and pollution tax are used together environmental damage will be non-monotone in the level of privatization, and optimal privatization is always partial privatization.Whether privatization will improve the environment or not depends on the public firm's concern for environment. If the public firm is unconcerned about environment, the socially optimal privatization will also damage the environment most. But when the public firm is concerned about environment, privatization will improve the environment. Generally, the relationship between optimal privatization and product substitutability is also non-monotone and inverted U-shaped.Key words: Privatization, differentiated mixed duopoly, environmental damage, environmental tax, social welfare. Pollution Tax, Partial Privatization and Environment AbstractConsidering a differentiated mixed duopoly we show that when privatization and pollution tax are used together environmental damage will be non-monotone in the level of privatization, and optimal privatization is always partial privatization.Whether privatization will improve the environment or not depends on the public firm's concern for environment. If the public firm is unconcerned about environment, the socially optimal privatization will also damage the environment most. But when the public firm is concerned about environment, privatization will improve the environment. Generally, the relationship between optimal privatization and product substitutability is also non-monotone and inverted U-shaped.

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“…As competition intensifies, and the optimal tax is adjusted accordingly, the benefits of R&D subsidies diminish. This result complements the analysis of Pal and Saha (2014) who studied the implementation of socially optimal outputs and abatements by a tax-subsidy scheme under a mixed monopoly.…”

Section: Emissions Abatement Randd Dynamic Competition In Supply Schedusupporting

confidence: 69%

Emissions abatement R&D and environmental policy

Pereira¹

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This dissertation studies the interaction between environmental policy, market structure and firms' incentives to invest in emissions reduction technology or emissions abatement research and development (R&D). It consists of three individual papers. The first paper examines how the intensity of market competition may affect the environmental policy. The second paper studies the conditions under which the design of an environmental policy can be beneficial for firms and society. The third paper analyses the effect of environmental R&D organisational structures on firms' innovation activities, profits, and social welfare when the R&D outcome is uncertain.The first paper investigates the optimal environmental policy (the mix of emissions tax and R&D subsidy) when two firms, producing differentiated products, compete in the output market over time. Firms compete over supply schedules, which encompass a continuum of market structures from Bertrand to Cournot. While production generates environmentally damaging emissions, firms can undertake R&D, which has the sole purpose of reducing emissions. In addition to characterising the optimal policy, we examine how the optimal tax and subsidy, and the optimal level of abatement change as competition intensifies, as the dynamic parameters change and as the investment in abatement technology changes. In this setting, increased competition no longer necessarily leads to an increase in welfare. Instead, there are two forces. Competition increases welfare through its impact on the final goods price. However, lower prices result in larger quantities and more pollution. Our contribution is to show how this impact depends on the extent of the market, the nature of preferences and the technology.The Porter Hypothesis, formulated by Michael Porter (1991), states that a well-designed environmental policy could encourage innovation and be beneficial for firms and society. In the second paper, we investigate the conditions under which the design of an environmental policy can align social and private interests. Results consistent with the Porter Hypothesis are derived without any behavioural assumptions or bounded rationality arguments, as it is commonly the case in the related literature. N symmetric firms compete in the output market by producing and selling homogeneous goods. Production entails the emission of a pollutant, which may be taxed.The general conditions for firms' profits and social welfare to be higher under an emissions tax than under no tax are determined. The key insight is that, for the representative firm's profit to increase with an increase in emissions tax, the emissions tax cost pass-through must be greater ii than the net emissions per unit of production, adjusted for the number of competing firms. As the intensity of competition increases, firms are more likely to benefit from an emissions tax, as the tax facilitates the exercise of market power.The third paper analyses firms' and social planner's choices of R&D cooperation when the innovation outcome i...

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Mixed Duopoly and Environment

Cited by 36 publications

References 16 publications

Endogenous timing in private and mixed duopolies with emission taxes

Endogenous timing in private and mixed duopolies with emission taxes

Pollution tax, partial privatization and environment

Emissions abatement R&D and environmental policy

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