Optimal Pollution Tax in Cournot Oligopsonistic Oligopoly

Cournot oligopoly has been studied almost exclusively under the implicit assumption of perfectly competitive factor markets. However,oligopolistic firms procure often factors of production from imperfectly competitive markets. Okuguchi(1998,2000) has analyzed Cournot oligopoly under the condition of imperfectly competitive factor markets,i.e.Cournot oligopsonistic oligopoly. Some economists have analyzed the optimal pollution tax rate which maximizes the net total social surplus for Cournot oligopoly(see Barnett(1980),Baumol and Oates(1980),Levin(1985),Okuguchi and Yamazaki(1994),Simpson(1995) and Okuguchi(2003)). A general finding is that the optimal pollution tax rate may be higher,lower or equal to the marginal value of the environmental damage. In this paper I will derive a general formula for the optimal pollution tax within Cournot oligopsonistic oligopoly where both product and factor markets are imperfectly competitive. In Section 2,I will prove that there exists a unique Cournot equilibrium for oligopsonistic oligopoly,given the level of the pollution tax rate. In Section 3,I will derive the optimal pollution tax rate capitalizing on the existence result in Section 2. I will clarify economic implications of the optimal pollution tax formula for some special cases. The final Section concludesoptimal pollution tax,Cournot oligopsonistic oligopoly,environmental damage

ANALYSIS OF PRIVATIZATION IN STACKELBERG MIXED OLIGOPOLY

Mixed oligopoly with one welfare-maximizing public and several profit-maximizing private firms exists in many economies. De Fraja and Delbono (1989) have analysed mixed oligopoly taking into account how the public firm behaves vis-à-vis the private firms on the basis of a linear market demand function and symmetric firms. They have found that the social welfare is greater in Stackelberg mixed oligopoly where the public firm acts as a leader than in Cournot mixed oligopoly where all firms simultaneously determine their outputs. A partial public firm tries to maximize the weighted average of the social welfare and its profits. Under some conditions, partial privatization of a public firm leads to greater social welfare than Cournot mixed oligopoly where the public firm is fully public (see Matsumura (1998) for duopoly and Okuguchi (2012) for oligopoly). In this paper we will prove that neither partial nor full privatization of a public firm is optimal in a general Stackelberg mixed oligopoly where the public firm acts as a leader and all private firms as followers

Optimal Pollution Tax within Labor-Managed and Profit-Maximizing Cournot Oligopolies

Optimal pollution tax rate is derived for labor-managed and profitmaximizing Cournot oligopolies with polluting firms and without product differentiation. If all firms are identical, the optimal pollution tax rate is higher than the marginal value of the environmental damage for labormanaged cournot oligopoly and lower than the marginal value of the environmental damage for profit-maximizing Cournot oligopoly

Nash Equilibrium in Rent-Seeking Games with Endogenous Rent

We formulate one-stage and two-stage rent seeking games with endogenously determined rent. Under reasonable assumptions, both games have a unique pure Nash equilibrium. We derive conditions for aggregate efforts to increase and for the total rent to dissipate as the number of agents increase for the two-stage rent-seeking game. JEL Classification Number: D72, L13, D43, C71, C64

Paradoxical Results in a Lobbying Model of Protection

Okuguchi and Yamazaki (1998) generalized Long and Soubeyran\u27s lobbying model of protection. They also constructed a simple numerical example with the linear inverse demand and cost functions to illustrate a paradoxical result in which entry of a new domestic firm leads to an increase in the domestic incumbents\u27 profits. This paper shows that the paradoxical result occurs even if cost functions are quadratic. Numerical examples in this paper, together with the one in Okuguchi and Yamazaki (1998), indicate that the paradoxical result is more likely if the number of domestic firms is small and if the number of foreign firms is large. JEL Classification Number: D43, D72, F13, L1

The Implications of Regulation for Induced Technical Change: Comment

Using a neoclassical production function with factor augmentation, Smith contends that induced innovation will reinforce both profit and sales maximizing firms' misallocation of resources under the regulatory constraint. We show that Smith's conclusion is not tenable.

Effects of tariff on international mexed duopoly with several markets

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