Mergers, Privatization and Environmental Considerations

ABSTRACT

The purpose of this paper is to analyze both merger sustainability and optimal privatization decisions, in an international mixed oligopoly model when it is explicitly assumed that firms’ production pollutes the environment. Contrary to traditional theory it is shown that both a merger between private firms and between one private and one public firm could be sustainable. Furthermore, the effects of environmental considerations on mixed firms’ optimal degree of privatization are analyzed.

KEYWORDS:

• Environmental damage
• transboundary pollution
• mixed oligopoly
• privatization
• mergers

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 It can be shown that the main results of the paper are robust to changes in the marginal cost value.

2 Along the paper, it is assumed that α and δ values are such that they guarantee positive quantities.

Additional information

Funding

This work was supported by the Xunta de Galicia, Consellería de Innovación e Industria, through project 10 PXIB 100 189 PR.

Notes on contributors

José Méndez Naya

José Méndez Naya PhD in Economics and Professor of the University of A Coruña. The specialized fields of investigation are both Industrial and International Economics, specifically the analysis of firms strategies in models of both private and mixed oligopolies.