Amitrajeet A. BATABYAL
Arthur J. Gosnell Professor of Economics, Departments of Economics and Sustainability, Rochester Institute of Technology, Rochester, NY 14623-5604, USA
aabgsh@rit.edu
Seung Jick YOO
Corresponding Author, Professor, Sookmyung Women’s University, Seoul, Republic of Korea
sjyoo@sookmyung.ac.kr
Abstract
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
pp. 47-53
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