Spanish Economic Review

, Volume 8, Issue 2, pp 139–160

Mixed Oligopoly and Environmental Policy

Authors

  • Juan Carlos Bárcena-Ruiz
    • Departamento de Fundamentos del Análisis Económico IUniversidad del País Vasco
    • Departamento de Fundamentos del Análisis Económico IUniversidad del País Vasco
Regular Article

DOI: 10.1007/s10108-006-9006-y

Cite this article as:
Bárcena-Ruiz, J.C. & Garzón, M.B. Spanish Economic Review (2006) 8: 139. doi:10.1007/s10108-006-9006-y

Abstract

We show in this paper that when there are both public and private firms in product markets (a mixed oligopoly) the decision whether to privatize a public firm interacts with the environmental policy of governments. Therefore, the outcome of the decision whether to privatize a public firm may be different if the government internalizes the environmental damage than if the government ignores it. When the government sets a tax to protect the environment, the tax is lower in the mixed oligopoly than in the private one even though the environmental damage is greater. In the mixed oligopoly the marginal cost of the public firm is lower than the market price.

Keywords

Environmental taxMixed oligopolyPrivatization

JEL Classification

L33Q28

Copyright information

© Springer-Verlag 2006