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Environmental Investments in Mixed vs Private Oligopoly: What are the Implications of Privatization?

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  • Maria Jose Gil-Molto
  • Dimitrios Varvarigos

Abstract

We compare economic and environmental outcomes under mixed and private oligopolies, in order to examine the effects of privatization when firms invest in abatement and emissions are taxed. We show that the number of competing firms in the market is an important factor in the determination of these effects. While privatization often involves a welfare trade-off, in the sense that higher (lower) output production implies higher (lower) pollution, there are also circumstances where it leads to both lower output and higher emissions simultaneously. Our results also indicate that privatization tends be associated with reductions in social welfare.

Suggested Citation

  • Maria Jose Gil-Molto & Dimitrios Varvarigos, 2014. "Environmental Investments in Mixed vs Private Oligopoly: What are the Implications of Privatization?," Discussion Papers in Economics 14/15, Division of Economics, School of Business, University of Leicester.
    • Handle: RePEc:lec:leecon:14/15
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    More about this item

    Keywords

    Privatization; Pollution; Abatement; Mixed Oligopoly;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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