The Environmental Effects of Ambient Charges in a Partially Cooperating Duopoly

This paper examines the environmental effects of ambient charges in a Cournot duopoly with partially cooperating firms. The model assumes that firms compete in quantities while partially internalizing each other’s profit, and that the regulator can observe aggregate ambient pollution but not firm-specific emissions. We derive the Cournot equilibrium and analyze how the ambient charge affects total industrial nonpoint-source pollution. The main result shows that an increase in ambient charges reduces total pollution in this partially cooperating duopoly. This finding suggests that ambient-based regulation can remain effective even when firms partly cooperate.

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Publication Details

Journal
Economic Analysis Letters
Published
2026-09-15
DOI
https://doi.org/10.58567/eal05040006
Primary Topic
Merger and Competition Analysis
Type
article
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article

The Environmental Effects of Ambient Charges in a Partially Cooperating Duopoly

Kazuhiro Ohnishi
Economic Analysis Letters
Merger and Competition Analysis
article

The Environmental Effects of Ambient Charges in a Partially Cooperating Duopoly

Kazuhiro Ohnishi
article en

Abstract

This paper examines the environmental effects of ambient charges in a Cournot duopoly with partially cooperating firms. The model assumes that firms compete in quantities while partially internalizing each other’s profit, and that the regulator can observe aggregate ambient pollution but not firm-specific emissions. We derive the Cournot equilibrium and analyze how the ambient charge affects total industrial nonpoint-source pollution. The main result shows that an increase in ambient charges reduces total pollution in this partially cooperating duopoly. This finding suggests that ambient-based regulation can remain effective even when firms partly cooperate.

Economic Analysis LettersVol. 5(4)
Japan Center for Economic Research (JP), Japan Economic Research Institute (JP)
Climate action
Openalex Percentile: Top 85%
Merger and Competition Analysis
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