Tanneries in Kanpur, India, water pollution in the Ganges, and unitization

Abstract

We analyzed water pollution in the Ganges River caused by tanneries in Kanpur, India. Specifically, we examined the merits of a claim made recently in the literature that unitizing or merging polluting tanneries can improve water quality in the Ganges. We modeled the \(n\ge 2\) polluting tanneries in Kanpur as a Cournot oligopoly and derived the equilibrium output of leather, profits, and social welfare. Second, we permitted \(m<n\) tanneries to merge and determined when the \(m\)-tannery unitization is profitable to the unitized entity. Third, the \((n-m)\) non-unitized tanneries were better off with unitization. Finally, our findings demonstrated that \(m\)-tannery unitization increases the industry price of leather and lowers social welfare. In conclusion, we discuss the implications of these findings for improved water quality in the Ganges.