Unitization of Tanneries and Water Pollution in the Ganges in Kanpur, India: The Salience of Fixed Costs

Batabyal, Amitrajeet (2025): Unitization of Tanneries and Water Pollution in the Ganges in Kanpur, India: The Salience of Fixed Costs.

Abstract

We study the merits of regulating water pollution in the Ganges river caused by tanneries in Kanpur, India, by unitizing or merging the polluting tanneries. We first describe the � ≥ 2 polluting tanneries in Kanpur as a Cournot oligopoly in which all tanneries incur fixed and variable costs in producing leather. Second, we derive the Nash equilibrium output of leather and profits and discuss how many tanneries can survive in this equilibrium as a function of the fixed costs. Third, we permit � < � tanneries to merge and determine when this �-tannery merger is profitable to the unitized entity and to the non-unitized tanneries. Finally, we explain how the usefulness of unitization as a regulatory strategy depends on the magnitude of the tannery fixed costs and then comment on what our findings mean for improved water quality in the Ganges.

• Item Type: MPRA Paper
• Language: English
• Keywords: Fixed Cost, Ganges River, Tannery, Unitization, Water Pollution
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation > Q25 - Water

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