On Unitization as a Way of Addressing Water Pollution in the Ganges in Kanpur, India

We study water pollution in the Ganges River caused by tanneries in Kanpur, India. We analyze the merits of a recent claim that unitizing or merging the polluting tanneries can improve water quality in the Ganges. We first describe the <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML" display="inline"> <mml:mrow> <mml:mi>n</mml:mi> <mml:mo>≥</mml:mo> <mml:mn>2</mml:mn> </mml:mrow> </mml:math> polluting tanneries in Kanpur as a Cournot oligopoly and derive the equilibrium output of leather and profits. Second, we permit <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML" display="inline"> <mml:mrow> <mml:mi>m</mml:mi> <mml:mo>&lt;</mml:mo> <mml:mi>n</mml:mi> </mml:mrow> </mml:math> tanneries to merge and determine the cost function, when the <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML" display="inline"> <mml:mi>m</mml:mi> </mml:math> tanneries can use their production facilities, and there are no other efficiency gains from unitization. Third, we examine when the <mml:math xmlns:mml="http://www.w3.org/1998/Math/MathML" display="inline"> <mml:mi>m</mml:mi> </mml:math> -tannery unitization is profitable to the unitized entity and to the non-unitized tanneries. Fourth, we discuss our conclusions about the profitability of the unitized and the non-unitized tanneries and comment on what our findings mean for improved water quality in the Ganges. Finally, we discuss some key regional dimensions of the Ganges water pollution problem caused by tanneries in Kanpur.