Social performance management in mixed oligopolies with pollutions: New policy mixes for public firms

Abstract

In this study, we introduce a novel government policy tool to address environmental damage: social performance management by public firms. This study examines its impact in mixed oligopolies. We find that introducing social performance management in Cournot competition can reduce overall environmental damage and increase social welfare. Depending on the number of private firms in the market, privatizing the public firm can be an optimal policy in Cournot competition. Conversely, in Stackelberg competition with the public firm as a leader, introducing social performance management decreases social welfare, and the optimal policy is to avoid any intervention including privatization other than taxation. Additionally, both social welfare and environmental damage are higher in Stackelberg competition without social performance management than in Cournot competition with social performance management. Our findings highlight the importance of considering competition patterns when developing policies for social performance management and privatization in mixed oligopolies.