This paper establishes a cross-industry pollution externality model. To explain a benevolent government, it may be possible to tax part of the welfare gains and use the revenue to compensate the affected polluted industry for the damage cost, thereby improving welfare. We show that the social welfare under emission tax with production subsidy is higher than the results of emission tax without production subsidy. The welfare of the polluted sector under emissions trading will be lower than the results of unbalanced budget environmental policy with subsidy. The welfare of the polluted labor union under lobby for compensation will be higher than the results of environmental policy with subsidy if the pollution damage and the weight on political contributions are sufficiently high.

This paper utilized a three-stage dynamic game to analyze the conflicts of interest between stakeholders caused by firm heterogeneity. We show that the higher the degree of heterogeneity, the higher the sales delegation incentive given. The firm’s heterogeneity scale will cause industry profit, union utility, consumer surplus and manager bonus conflicts of interest. Furthermore, the intensity of conflict is lower between the industry and the union than between the industry and consumer and between the industry and manager if the degree of heterogeneity is relatively small.

In this paper, we explore the influence of union structure and wage pricing strategies on the welfare under a mixed oligopoly which has a public firm with budget constraint. We showed that, the total utilities of the decentralized unions are higher than the utility of the centralized union under mixed duopoly if the centralized union charges a uniform wage and the productivity difference is large. The government should restrict the centralized union formed by the public and the private firm to charge discriminatory wages, and to avoid the improper use of the monopoly power of the labour union.

No abstract