Cobb-Douglas Preferences and Pollution in a Bilateral Oligopoly Market
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Anicet B. Kabré
Abstract
In this paper, we investigate how pollution changes with preferences, focusing on a finite bilateral oligopoly model where agents have asymmetric Cobb-Douglas preferences. Producers are also consumers and the choice of heterogeneous preferences is related to the psychological foundations and identity aspects of group membership. We compare two strategic equilibria: the Stackelberg-Cournot equilibrium with pollution (SCEP) and the Cournot equilibrium with pollution (CEP). We show that considering the asymmetric preferences helps the public decision-maker to identify precisely the category of agents (consumer–producers or pure-consumers) for which a change in environmental preference parameters will most effectively reduce pollution. Furthermore, we find that firms’ emissions’ elasticity decreases with market power (when the market power increases) if their marginal cost is lower than their competitor. Finally, we show that when producers are also consumers, an action on pure-consumers’ preference parameters reduces more emissions than a similar action on consumer–producers, and this regardless of the timing of interaction.
Acknowledgements
I’m grateful to Professors Ludovic A. Julien and Louis de Mesnard for their remarks. All remaining deficiencies are my own.
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Author contribution: All the authors have accepted responsibility for the entire content of this submitted manuscript and approved submission.
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Research funding: None declared.
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Conflict of interest statement: The authors declare that they have no conflict of interest.
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© 2021 Walter de Gruyter GmbH, Berlin/Boston
Artikel in diesem Heft
- Frontmatter
- Research Articles
- Duty to Read vs Duty to Disclose Fine Print. Does the Market Structure Matter?
- Cobb-Douglas Preferences and Pollution in a Bilateral Oligopoly Market
- Epsilon-Efficiency in a Dynamic Partnership with Adverse Selection and Moral Hazard
- Management Turnover, Strategic Ambiguity and Supply Incentives
- Uninformed Bidding in Sequential Auctions
- Arrowian Social Equilibrium: Indecisiveness, Influence and Rational Social Choices under Majority Rule
- Family Ties and Corruption
- Social Efficiency of Entry in a Vertical Structure with Third Degree Price Discrimination
- Insufficient Entry and Consumer Search
- Quality Competition and Market-Share Leadership in Network Industries
- The Effects of Introducing Advertising in Pay TV: A Model of Asymmetric Competition between Pay TV and Free TV
- Redistributive Unemployment Benefit and Taxation
- Constrained Persuasion with Private Information
- A Dynamic Graph Model of Strategy Learning for Predicting Human Behavior in Repeated Games
- Relative Income Concerns, Dismissal, and the Use of Pay-for-Performance
- Delegation in Vertical Relationships: The Role of Reciprocity
- Step by Step Innovation without Mutually Exclusive Patenting: Implications for the Inverted U
- Data and Competitive Markets: Some Notes on Competition, Concentration and Welfare
- Notes
- Optimality of a Linear Decision Rule in Discrete Time AK Model
- Equilibrium Pricing under Concave Advertising Costs
Artikel in diesem Heft
- Frontmatter
- Research Articles
- Duty to Read vs Duty to Disclose Fine Print. Does the Market Structure Matter?
- Cobb-Douglas Preferences and Pollution in a Bilateral Oligopoly Market
- Epsilon-Efficiency in a Dynamic Partnership with Adverse Selection and Moral Hazard
- Management Turnover, Strategic Ambiguity and Supply Incentives
- Uninformed Bidding in Sequential Auctions
- Arrowian Social Equilibrium: Indecisiveness, Influence and Rational Social Choices under Majority Rule
- Family Ties and Corruption
- Social Efficiency of Entry in a Vertical Structure with Third Degree Price Discrimination
- Insufficient Entry and Consumer Search
- Quality Competition and Market-Share Leadership in Network Industries
- The Effects of Introducing Advertising in Pay TV: A Model of Asymmetric Competition between Pay TV and Free TV
- Redistributive Unemployment Benefit and Taxation
- Constrained Persuasion with Private Information
- A Dynamic Graph Model of Strategy Learning for Predicting Human Behavior in Repeated Games
- Relative Income Concerns, Dismissal, and the Use of Pay-for-Performance
- Delegation in Vertical Relationships: The Role of Reciprocity
- Step by Step Innovation without Mutually Exclusive Patenting: Implications for the Inverted U
- Data and Competitive Markets: Some Notes on Competition, Concentration and Welfare
- Notes
- Optimality of a Linear Decision Rule in Discrete Time AK Model
- Equilibrium Pricing under Concave Advertising Costs
