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Privatization and the Environment

Author

Listed:
  • Susumu Cato

    (Graduate School of Economics, University of Tokyo)

Abstract

We investigate the privatization policy of an industry where the production process generates emissions. We show that the high degree of negative externality leads to production substitution from the public firm to private firms. Moreover, we show that, if the degree of negative externality is sufficiently high, then a mixed oligopoly is preferable to a pure oligopoly for social welfare, even if the number of firms in the market is large. Furthermore, we consider free entry of private firms.

Suggested Citation

  • Susumu Cato, 2008. "Privatization and the Environment," Economics Bulletin, AccessEcon, vol. 12(19), pages 1-10.
    • Handle: RePEc:ebl:ecbull:eb-08l30002
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    References listed on IDEAS

    as
    1. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December.
    2. Kazuhiko Kato, 2006. "Can Allowing to Trade Permits Enhance Welfare in Mixed Oligopoly?," Journal of Economics, Springer, vol. 88(3), pages 263-283, September.
    3. de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-311, April.
    4. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, September.
    5. Toshihiro Matsumura & Osamu Kanda, 2005. "Mixed Oligopoly at Free Entry Markets," Journal of Economics, Springer, vol. 84(1), pages 27-48, February.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Susumu Cato, 2011. "Environmental policy in a mixed market: abatement subsidies and emission taxes," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 13(4), pages 283-301, December.
    2. Xu, Lili & Lee, Sang-Ho & Matsumura, Toshihiro, 2017. "Ex-ante versus ex-post privatization policies with foreign penetration in free-entry mixed markets," International Review of Economics & Finance, Elsevier, vol. 50(C), pages 1-7.
    3. Xu, Lili & Lee, Sang-Ho, 2018. "The timing of environmental policies with excess burden of taxation in free-entry mixed markets," MPRA Paper 83560, University Library of Munich, Germany.
    4. Xu, Lili & Lee, Sang-Ho, 2018. "Corporate Social Responsibility And Environmental Taxation With Endogenous Entry," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 59(2), pages 61-82, December.
    5. Rupayan Pal & Bibhas Saha, 2014. "Mixed Duopoly and Environment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(1), pages 96-118, February.
    6. Toshihiro Matsumura & Akira Ogawa, 2017. "Endogenous Timing in Mixed Duopolies With Externality," Australian Economic Papers, Wiley Blackwell, vol. 56(4), pages 304-327, December.
    7. Kazuhiko Kato, 2011. "Emission quota versus emission tax in a mixed duopoly," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 13(1), pages 43-63, January.
    8. Pal, Rupayan & Saha, Bibhas, 2015. "Pollution tax, partial privatization and environment," Resource and Energy Economics, Elsevier, vol. 40(C), pages 19-35.
    9. Wang, Chang & Guo, Yue & Yang, Yu & Chen, Shiyi, 2022. "The environmental benefits of electricity industry restructuring in China: Ownership mixing vs. vertical unbundling," Energy Economics, Elsevier, vol. 115(C).
    10. Akira Yakita & Donglin Zhang, 2022. "Environmental awareness, environmental R&D spillovers, and privatization in a mixed duopoly," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 24(3), pages 447-458, July.
    11. Kazuhiko Kato, 2013. "Optimal degree of privatization and the environmental problem," Journal of Economics, Springer, vol. 110(2), pages 165-180, October.
    12. Meyer, Andrew & Pac, Grzegorz, 2013. "Environmental performance of state-owned and privatized eastern European energy utilities," Energy Economics, Elsevier, vol. 36(C), pages 205-214.
    13. Leonard F. S. Wang & Ya-chin Wang & Lihong Zhao, 2009. "Privatization and the Environment in a Mixed Duopoly with Pollution Abatement," Economics Bulletin, AccessEcon, vol. 29(4), pages 3112-3119.
    14. Shim, Changsub & Hong, Jiyoun, 2016. "Impact of a national plan for future electricity supply on ambient air quality in South Korea," Energy Policy, Elsevier, vol. 88(C), pages 278-288.
    15. Tsai, Tsung-Hsiu & Wang, Chia-Chi & Chiou, Jiunn-Rong, 2016. "Can privatization be a catalyst for environmental R&D and result in a cleaner environment?," Resource and Energy Economics, Elsevier, vol. 43(C), pages 1-13.
    16. Xu, Lili & Lee, Sang-Ho, 2018. "Environmental policies with excess burden of taxation in free-entry mixed markets," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 1-13.
    17. Sang-Ho Lee & Lili Xu, 2018. "Endogenous timing in private and mixed duopolies with emission taxes," Journal of Economics, Springer, vol. 124(2), pages 175-201, June.
    18. Lee, Sang-Ho & Nakamura, Tamotsu & Park, Chul-Hi, 2017. "Optimal Privatization Policy in a Mixed Eco-Industry in the Presence of Commitments on Abatement Technologies," MPRA Paper 80902, University Library of Munich, Germany.
    19. Rupayan Pal & Bibhas Saha, 2011. "Environmental outcomes in a model of mixed duopoly," University of East Anglia Applied and Financial Economics Working Paper Series 030, School of Economics, University of East Anglia, Norwich, UK..

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    More about this item

    Keywords

    production substitution;

    JEL classification:

    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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