Study on Environmental Policy for Non-Point Source Pollutions in a Bertrand Duopoly

This study investigates the effectiveness of ambient charges under non-point source (NPS) pollutions in an imperfect competition framework. To this end, following Ganguli and Raju [1], it constructs a one-stage game and a two-stage game in which Bertrand duopolistic firms choose their best prices and abatement technology, respectively. It is demonstrated in both games that an increase in the ambient charge can lead to a decrease in pollution. This finding indicates that the ambient charge might be an efficient method to control NPS pollutions even in a duopoly Bertrand market.