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| Rupayan Pal and Bibhas Saha |
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| ''Mixed Duopoly and Environment'' |
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| We show under general demand and cost conditions that in a mixed duopoly with pollution the government can 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 improves on the shortcoming of a pollution tax to implement the social optimum. 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. |
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| Keywords: Environmental damage, mixed duopoly, privatization, tax-subsidy scheme, foreign firm |
JEL: H2 - Taxation, Subsidies, and Revenue: General
Q5 - Environmental Economics: General |
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| Manuscript Received : Jan 27 2011 | | Manuscript Accepted : Jan 27 2011 |
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