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Kadohognon Sylvain Ouattara
''Pollution abatement and partial privatization''
( 2019, Vol. 39 No.3 )
This paper considers a mixed duopoly model where there are spillovers in environmental R&D. We adopt a three-stage game formulated by Haruna and Goel (2018) and investigate the impact of partial privatization on firm's investment in R&D and environmental taxes. We show that if the degree of privatization is relatively low and the spillover effect is significant, the private firm undertakes R&D and the government subsidizes emissions. Our model suggests that the government should never subsidize R&D when both firms invest in R&D. Furthermore, an increase in the degree of privatization is worse for the environment, but partial privatization increases social welfare.
Keywords: Emissions fees; Environmental R&D; Partial privatization; Social welfare
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
L3 - Nonprofit Organizations and Public Enterprise: General
Manuscript Received : Feb 13 2019 Manuscript Accepted : Aug 20 2019

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