Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/159456
Authors: 
Lambertini, Luca
Mantovani, Andrea
Year of Publication: 
2007
Series/Report no.: 
Quaderni - Working Paper DSE 615
Abstract: 
We investigate the bearings product market collusion on the abatement of polluting emissions in a Cournot oligopoly where production entails a negative environmental externality. We model the problem as a differential game and investigate the feedback solution of two alternative settings: a fully noncooperative oligopoly and a cartel maximising the discounted profits of all firms in the industry. Our analysis proves that the output reduction entailed by collusive behaviour may have a benefiacial effect on steady state welfare, as a result of the balance between a higher market price and a lower amount of polluting emissions. This result opens a new prespective on the debate about the management of environmental externalities, which so far has mainly focussed on the design of Pigouvian taxation schemes.
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Working Paper

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