Optimal Pollution Control in a Mixed Oligopoly with Research Spillovers

29 Pages Posted: 20 Apr 2018

See all articles by Shoji Haruna

Shoji Haruna

Okayama University

Rajeev K. Goel

Illinois State University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 05, 2018

Abstract

We study optimal pollution abatement under a mixed oligopoly game when firms engage in emissions-reducing R&D that is imperfectly appropriable. The regulator uses a tax to curb emissions. Results show that in a mixed oligopoly, the public firm has positive emissions reduction in equilibrium; however, emissions reductions of the private firm could be positive or zero. Under certain conditions, the optimal pollution tax is positive; otherwise, the tax reverts to a subsidy. Comparing mixed and private duopolies, privatization leads to reductions in R&D and output, but to an increase in overall emissions, so privatization tends to make the environment worse.

Keywords: mixed oligopoly, R&D, pollution, spillovers, taxation, subsidy

JEL Classification: D430, D620, O330, Q550

Suggested Citation

Haruna, Shoji and Goel, Rajeev K., Optimal Pollution Control in a Mixed Oligopoly with Research Spillovers (March 05, 2018). CESifo Working Paper Series No. 6909. Available at SSRN: https://ssrn.com/abstract=3165342

Shoji Haruna

Okayama University ( email )

1-1-1 Tsushimanaka, Kita Ward
Okayama, 700-0082
Japan

Rajeev K. Goel (Contact Author)

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

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