Strategic Behavior and the Environment > Vol 3 > Issue 3

Corporate Environmentalism in Dynamic Oligopoly

Akihiko Yanase, Graduate School of International Cultural Studies, Tohoku University, Japan,
Suggested Citation
Akihiko Yanase (2013), "Corporate Environmentalism in Dynamic Oligopoly", Strategic Behavior and the Environment: Vol. 3: No. 3, pp 223-250.

Published: 16 Mar 2013
© 2013 A. Yanase
Corporate environmentalismDifferential gameEnvironmental consciousness

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In this article:
Symmetric Firms
Asymmetric Firms
Abatement Activity
Concluding Remarks
Derivation of Markov Perfect Nash Equilibria
Long-run Effects in the Nonlinear Strategy that Achieves the Lower Bound of Pollution Stock


This study investigates how an increase in the firms' environmental consciousness affects the environment and economic welfare in the presence of dynamic oligopolistic competition where firms' objective may include the society's damage from stock pollution as well as their profits. If all firms are symmetric, an increase in the environmental consciousness reduces consumer surplus and social welfare in the short-run. However, profits may increase if the firms are initially less environmentally conscious. The long-run effects are similar to the short-run ones except for the effect on social welfare because pollution stock is reduced in the steady state. In the case of asymmetric firms, an increase in the polluting firms' environmental consciousness reduces their output whereas it increases the clean firms' output. The clean firms become better off, but depending on the relative number of polluting firms versus clean firms, the polluting firms' profits may increase or decrease.