The influence of transportation costs and environmental damage on social welfare under asymmetric multi-market mixed oligopoly

Abstract

This study investigates how transportation costs and environmental damage affect social welfare and the optimal degree of nationalization by assuming asymmetric mixed oligopoly markets. It assumes that both transportation costs and environmental damage are incurred when products are transported regionally. We find that even if transportation costs or environmental damage decrease, social welfare does not always improve under full nationalization. Next, this study examines how transportation costs and environmental damage affect the optimal degree of nationalization. We find that the optimal degree of nationalization does not always increase with transportation costs and environmental damage. Explaining how transportation costs and environmental damage affect socially preferable privatization policy is important because previous studies on partial privatization have not discussed their influence.

Keywords

• J13
• E61
• Q59
• R31
• R32