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Journal of Economics

, Volume 124, Issue 2, pp 175–201 | Cite as

Endogenous timing in private and mixed duopolies with emission taxes

  • Sang-Ho Lee
  • Lili XuEmail author
Article

Abstract

This paper examines an endogenous timing game in product differentiated duopolies under price competition when emission tax is imposed on environmental externality. We show that a simultaneous-move (sequential-move) outcome can be an equilibrium outcome in a private duopoly under significant (insignificant) environmental externality, but this result can be reversed in a mixed duopoly. We also show that when environmental externalities are significant, public leadership yields greater welfare than private leadership, and that public leadership is more robust than private leadership as an equilibrium outcome. Finally, we find that privatization can result in a public leader becoming a private leader, but this worsens welfare.

Keywords

Emission tax Endogenous timing Mixed duopoly Private duopoly 

JEL Classification

L5 D6 Q2 

Notes

Acknowledgements

We are very grateful to an anonymous referee for many helpful comments and suggestions. All remaining errors are ours. This work was supported by Korea Ministry of Environment (MOE) as Graduate School specialized in Climate Change and the Fundamental Research Funds for the Central Universities (3132017137, 3132017084).

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Copyright information

© Springer-Verlag GmbH Austria 2017

Authors and Affiliations

  1. 1.Department of EconomicsChonnam National UniversityGwangjuKorea
  2. 2.Department of Economics and TradeDalian Maritime UniversityDalianChina

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