Partial privatization and unidirectional transboundary pollution

Kato, Kazuhiko (2010): Partial privatization and unidirectional transboundary pollution.

Abstract

We determine whether or not a local regional government should privatize its local public firm in a mixed duopoly when it faces the problem of unidirectional transboundary pollution. We consider two regions in an economy, one located upstream and the other, downstream. Where both the local public firm owned by the local government upstream and the private firm are located and compete upstream, we analyze two cases: (h) the private firm is owned by private investors upstream and (f) it is owned by private investors downstream. A comparison of the two cases presents the following results. Partial privatization is desirable for local welfare upstream in (h), but it is not always desirable in (f). In both (h) and (f), it is desirable for local welfare downstream and for the overall welfare of the economy when the degree of environmental damage and the fraction of transboundary pollution upstream are low. However, when they are high, the results change for (h) and (f).

• Item Type: MPRA Paper
• Language: English
• Keywords: Mixed Duopoly; Privatization; Transboundary pollution
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q53 - Air Pollution ; Water Pollution ; Noise ; Hazardous Waste ; Solid Waste ; Recycling; L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L33 - Comparison of Public and Private Enterprises and Nonprofit Institutions ; Privatization ; Contracting Out; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R38 - Government Policy

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