Transformations  in
Business & Economics

INCENTIVE POLICIES FOR POSITIVE CONSUMPTION EXTERNALITIES IN A MULTI-OLIGOPOLY MODEL⁸
Xiaolei Wang, Jijun Tang, Runxian Ma

ABSTRACT: Incentive policies significantly affect the supply of products and social welfare. This study constructs a multiple oligopoly market considering product differentiation and positive consumption externalities, and examines the optimal policy of the three incentive policies: nationalisation, government subsidies, and market access, then analyses the impacts of product differentiation and positive consumption externalities. The results show that different equilibrium results are influenced by product differentiation and positive consumption externalities. The three types of incentive policies make different benefit distribution effects, and the nationalisation policy is optimal when product differentiation is above a certain level; otherwise, the subsidy policy is optimal.

KEYWORDS:  incentive policy, nationalisation, government subsidy, market access, oligopoly.

JEL classification:  D43, L13, L51

⁸Acknowledgments:  The research is supported by the Scientific Research Project of Hebei Higher Education Institutions of China (Grant Number: SQ2023223), the Fundamental Research Projects of Department of Education of Liaoning Province of China (Grant Number: JYTZD2023063), and the National Social Science Foundation of China (Grant Number: 13&ZD022).