To abate, or not to abate? A strategic approach on green production in Cournot and Bertrand duopolies

Buccella, Domenico; Fanti, Luciano; Gori, Luca

doi:10.1016/j.eneco.2021.105164

Cited by 54 publications

(25 citation statements)

References 50 publications

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“…Further, recent works have also conducted price versus quantity comparisons in a mixed oligopoly. See, for instance,Ghosh and Mitra (2010),Matsumura and Ogawa (2012),Scrimitore (2014), Matsumura (2014, 2015),Nakamura (2015),Xu et al (2016), andBuccella et al (2021).…”

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confidence: 99%

Emission tax and strategic environmental corporate social responsibility in a Cournot–Bertrand comparison

Chen

Lee

2022

Energy Economics

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This study considers strategic relations between emission tax and environmental corporate social responsibility (ECSR) in a Cournot-Bertrand comparison, and analyzes two different timings of the games between a tax-then-ECSR (T game) and an ECSR-then-tax (E game). We show that the T game always yields higher emission tax than the E game irrespective of competition modes, but lower ECSR under Cournot while higher ECSR when the marginal damage is high under Bertrand.Additionally, compared with Bertrand, Cournot yields lower (higher) ECSR in the T (E) game, but lower emission tax in the E game while higher emission tax when the product substitutability is low in the T game. We finally show that firms always prefer Cournot competition with the commitment of E game irrespective of the product substitutability and marginal damage.

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confidence: 99%

Emission tax and strategic environmental corporate social responsibility in a Cournot–Bertrand comparison

Chen

Lee

2022

Energy Economics

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“…where the superscript GD/GD stands for the 'green' delegation of both managers. The solution of the system of output reaction functionsq 8) gives the following pre-tax stage equilibrium output as a function of the emissions 8 Given the non-cost-reducing version of the abatement R&D function (Ulph, 1996;Asproudis and Gil-Moltó, 2015;Buccella et al, 2021), CA i (k i ), there is no difference whether managers or owners choose the optimal amount of k i by maximizing U i or π i , respectively, at the market stage of the game. The results of the GD game might change, instead, upon considering a cost-reducing (product innovation) version of the abatement R&D function like d'Aspremont and Jacquemin (1988Jacquemin ( , 1990 and Bacchiega et al (2010).…”

Section: The Symmetric Subgame Gd/gdmentioning

confidence: 99%

‘Green’ managerial delegation theory

2021

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This article develops a non-cooperative game with managerial quantity-setting firms in which owners choose whether to delegate output and abatement decisions to managers through a contract based on emissions (conventionally denoted as ‘green’ delegation, GD) instead of sales (sales delegation, SD), and the government levies an emissions tax to incentivise firms’ emissions-reduction actions. First, it compares the Nash equilibrium outcomes between GD and SD and then contrasts them also with profit maximisation (PM). A plethora of Nash equilibria emerges, especially in the case GD versus PM (the ‘green delegation game’), depending on the public awareness toward environmental quality, ranging from the coordination game to the ‘green’ prisoner's dilemma. Second, though the contract under GD incentivises managers for emissions, the environmental damage is lower than under SD. This is because the optimal tax more than compensates the incentive for emissions. These findings suggest that designing GD contracts paradoxically favours environmental quality.

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“…For example, in the fashion industry, Uniqlo, the famous Japanese fashion retail giant, has announced that they would start to sell Dry-Ex POLO shirts made from recycled PET plastic bottles in 2020, which aims at reducing environmental pollution caused by the manufacturing process 3 . Furthermore, in the home appliance industry, Whirlpool, one of the world's leading manufacturers, has offered green products that dramatically reduce energy requirements and improve performance 4 . The same situation can be observed in the real estate industry.…”

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confidence: 99%

“…On the one hand, the enterprises could meet green market trends by developing green products. On the other hand, green production needs high costs [4]. In practice, compared with the non-green products, both the production cost and the quality of the green products are higher owing to the sustainable raw material and advanced production technology [5,6].…”

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confidence: 99%

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The optimal product-line design and incentive mechanism in a supply chain with customer environmental awareness

Zhang

Kong

et al. 2023

JIMO

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<p style='text-indent:20px;'>Due to the increasing awareness of sustainable development, the manufacturer's product-line design gets wide attention. Nowadays, the traditional manufacturer that produces non-green products is considering whether to introduce upgraded green products. This paper studies the manufacturer's optimal product-line design considering the quality difference between non-green and green products. Besides, our model also investigates the difference in unit production cost, green research and development (R&D) investment, and market segmentation. The results show that, from the manufacturer's perspective, producing green products is a better choice when non-green products are of low quality. In addition, the retailer is always inclined to sell green products. Further, the consumers' preference for non-green and green products is divided. And the consumer surplus under different product-line designs is analysed. Finally, two contracts are proposed and compared to encourage the manufacturer to produce green products.</p>

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To abate, or not to abate? A strategic approach on green production in Cournot and Bertrand duopolies

Cited by 54 publications

References 50 publications

Emission tax and strategic environmental corporate social responsibility in a Cournot–Bertrand comparison

Emission tax and strategic environmental corporate social responsibility in a Cournot–Bertrand comparison

‘Green’ managerial delegation theory

The optimal product-line design and incentive mechanism in a supply chain with customer environmental awareness

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