TITLE:
Environmental Policy for Non-Point Source Pollutions in a Bertrand Duopoly
AUTHORS:
Akio Matsumoto, Keiko Nakayama, Ferenc Szidarovszky
KEYWORDS:
Non-Point Source Pollution, Abatement Technology, Ambient Charge, Bertrand Competition, Two-Stage Game
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.5,
April
17,
2018
ABSTRACT: This study investigates the effectiveness of ambient
charges under non-point source (NPS) pollutions in an imperfect competition
framework. To this end, following Ganguli and Raju, it constructs a one-stage
game and a two-stage game in which Bertrand duopolistic firms choose their best
prices and abatement technology, respectively. It is demonstrated in both games
that an increase in the ambient charge can lead to a decrease in pollution.
This finding indicates that the ambient charge can efficiently control
pollution in a Bertrand duopoly.