Abstract
ABSTRACTThis paper investigates the effect caused by an increase in ambient charges on firm-specific and total pollutions in a Cournot oligopoly market. Formalising profit-maximising behaviour in the n-firm framework with product differentiation, we show the static result that ambient charge can reduce industrial pollution. We then demonstrate three dynamic results: the first that Cournot equilibrium can lose stability in the discrete-time framework if the number of the firms is greater than four, the second that it is always stable in the continuous-time framework and the third that stability can be switched to instability if a delay in production becomes large enough.
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