Environmental effects of ambient charge in cournot oligopoly

This paper investigates the effect caused by an increase in ambient charges on firm-specific and total pollutions in a Cournot oligopoly market. Formalising profit-maximising behaviour in the n-firm framework with product differentiation, we show the static result that ambient charge can reduce indu...

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Bibliographic Details
Published inJournal of environmental economics and policy Vol. 7; no. 1; pp. 41 - 56
Main Authors Matsumoto, Akio, Szidarovszky, Ferenc, Yabuta, Masahiro
Format Journal Article
LanguageEnglish
Published Routledge 01.01.2018
Subjects
ambient charge
Cournot competition
nonpoint source pollution
production delay
stability switch
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Summary:This paper investigates the effect caused by an increase in ambient charges on firm-specific and total pollutions in a Cournot oligopoly market. Formalising profit-maximising behaviour in the n-firm framework with product differentiation, we show the static result that ambient charge can reduce industrial pollution. We then demonstrate three dynamic results: the first that Cournot equilibrium can lose stability in the discrete-time framework if the number of the firms is greater than four, the second that it is always stable in the continuous-time framework and the third that stability can be switched to instability if a delay in production becomes large enough.
ISSN:2160-6544
2160-6552
DOI:10.1080/21606544.2017.1347527