Amitrajeet A. BATABYAL
Arthur J. Gosnell Professor of Economics, Departments of Economics and Sustainability, Rochester Institute of Technology, Rochester, NY 14623-5604, USA
Seung Jick YOO
Corresponding Author, Professor, Sookmyung Women’s University, Seoul, Republic of Korea
We theoretically analyze the interaction between two representative and real tanneries, denoted by and that are located on the same bank of the Ganges River in Kanpur, India. Tannery is situated upstream from tannery Both tanneries produce leather and leather production by tannery also gives rise to chemical waste that adversely affects the cost incurred by tannery in producing leather. In this setting, we perform four tasks. First, we determine the amount of chemical waste and the leather produced by tanneries and in a competitive equilibrium. Second, we explain why this competitive equilibrium is inefficient from a societal standpoint. Third, we ascertain the socially optimal amount of leather produced by the two tanneries. Finally, we illustrate the working of our theoretical model with a specific example in which we use explicit functional forms and numbers.
Keywords: Ganges River, Leather Production, Tannery, Waste Treatment, Water Pollution
JEL classification: R11, R22, R32, Q52, Q53