We characterise the socially optimal mix of firms in a duopoly with both
profit-seeking and labour-managed firms. Firms’ activities generate a twofold
externality: (i) production entails the exploitation of a common pool natural resource
and (ii) production/consumption pollutes the environment. We show that it is always
preferable to have at least one labour-managed firm in the industry, in view of its softer
impact on environmental magnitudes. Moreover, if market size is large enough, a mixed
duopoly is indeed the socially efficient industry configuration.
Keywords: Mixed oligopoly, Pollution, Resource extraction.
