Strivers or Slackers: A Strategic Analysis of Firms’ Green Production in a Mixed Duopoly with Technology Spillover

As the “isolation belts” between the government and the market, state-owned enterprises (SOEs) are responsible for multi-task objectives in a transition economy. This study aims to investigate the optimal abatement strategies of enterprises in a mixed oligopoly with spillover effects when the emission tax is determined by the government. Our analysis mainly indicates the following: (i) once abatement technology is adopted (regardless of which enterprise adopts the technology), large spillovers of green technology enhance social welfare; (ii) non-SOEs earn more profit in a mixed economy when marginal damage of emissions or societal awareness toward environment increases; (iii) SOEs always choose to abate emissions in a mixed economy and privatization policy might reduce total output and social welfare. These findings provide a new understanding of the role of SOEs and non-SOEs in sustainable development.