Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/176928 
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 6909
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
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.
Subjects: 
mixed oligopoly
R&D
pollution
spillovers
taxation
subsidy
JEL: 
D43
D62
O33
Q55
Document Type: 
Working Paper
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