N-person Oligopoly with Polluting Firms

Abstract

The classical oligopoly game is examined with polluting firms. In addition to the unit price and production costs we consider the ambient taxes and individual abatement costs by the firms. Under realistic assumptions the existence of the unique equilibrium and its asymptotical stability under gradient dynamics are proved. In the linear case analytic expressions are derived for the equilibrium production levels of the firms as well as for their pollution emissions.