Abstract
We characterise the socially optimal mix of firms in a duopoly with both profit-seeking and labour-managed firms. Firms’ activities generate a twofold externality: (i) production entails the exploitation of a common pool natural resource and (ii) production/consumption pollutes the environment. We show that it is always preferable to have at least one labour-managed firm in the industry, in view of its softer impact on environmental magnitudes. Moreover, if market size is large enough, a mixed duopoly is indeed the socially efficient industry configuration.
Keywords: Mixed oligopoly, Pollution, Resource extraction.
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