To abate, or not to abate? A strategic approach on green production in Cournot and Bertrand duopolies

This research analyses firms' strategic choice of adopting an abatement technology in environment with pollution externalities when the government levies emission tax to incentivise firms undertake emission-reducing actions. A set different Nash equilibria – ranging from dirty green production arises both quantity-setting and price-setting duopolies. Results show that if societal awareness towards a clean is relatively low (resp. high) index measuring relative cost high low), interaction between two independent, competing, selfish playing game leads them not abate abate) as Pareto efficient outcome: no conflict exists self-interest mutual benefit undertake) emissions-reducing Multiple or “green” prisoner's dilemma can also emerge pure strategies. When anti-prisoner's (deadlock), society better off, social welfare under always larger than abatement. These findings suggest living sustainable encourages improvement public education systems for achievement eco-responsible attitude development technologies through ad hoc R&D.