General Equilibrium Implications of Privatization on Environment and Unemployment in Vertically Related Markets

This paper is aimed at theoretically analyzing the environmental implications of privatization, adopted by many developing countries, using a three-sector general equilibrium model. The partially privatized firm owns monopolistic position in upstream market and offers an essential intermediate input for downstream manufacturing sector. Both generate pollution that harms agricultural productivity. We obtain price elasticity demand goods crucial determining impact privatization. When relatively small (large), deepening privatization raises (decreases) partial improves (deteriorates) environment. also show paradoxical result improving abatement technology deteriorates environment instead.