N-person oligopoly with polluting firms II.

Abstract

A special oligopoly game is examined which consists of polluting firms. In addition to the produced amounts the individual abatement rates are also decision variables of the firms. In addition to earlier studies the cost of the abatement technology is also included in the payoff functions. Under realistic conditions the existence of a unique equilibrium is proved and a single variable monotonic equation is derived for its computation. Assuming gradient adjustments it is also shown that the equilibrium is asymptotically stable.