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Technology Adoption by Heterogeneous Producers to Regulate a Stock Externality

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Author Info
Xabadia, Angels
Goetz, Renan
Zilberman, David

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Abstract

This paper presents a framework to determine optimal resource allocation over time for the production of a good by heterogeneous producers who generate a stock externality. We analyze the optimal intertemporal and quality-specific combination of abatement strategies at the source given by a change in the intensity of production and in the chosen technology, and/or removal of existing pollution stock. The results show how the specifications of the production and the emission functions affect technology adoption and the design of the optimal intertemporal combination of source and stock abatement strategies. Moreover, the paper shows that regulation at the intensive margin cannot be considered as a substitute for a regulation at the extensive margin. The paper employs the so-called two-stage solution approach for solving the resulting quality distributed-intertemporal optimal control problem.

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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2005 Annual meeting, July 24-27, Providence, RI with number 19538.

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Date of creation: 2005
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Handle: RePEc:ags:aaea05:19538

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Keywords: Research Methods/ Statistical Methods;

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  1. Chakravorty, Ujjayant & Roumasset, James & Tse, Kinping, 1997. "Endogenous Substitution among Energy Resources and Global Warming," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1201-34, December.
  2. Edwards, Rufus D. & Smith, Kirk R. & Zhang, Junfeng & Ma, Yuqing, 2004. "Implications of changes in household stoves and fuel use in China," Energy Policy, Elsevier, vol. 32(3), pages 395-411, February. [Downloadable!] (restricted)
  3. Goetz, Renan U. & Zilberman, David, 2000. "The dynamics of spatial pollution: The case of phosphorus runoff from agricultural land," Journal of Economic Dynamics and Control, Elsevier, vol. 24(1), pages 143-163, January. [Downloadable!] (restricted)
  4. Feng, Hongli & Zhao, Jinhua & Kling, Catherine L, 2002. " The Time Path and Implementation of Carbon Sequestration," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 84(1), pages 134-49, February. [Downloadable!] (restricted)
  5. Feng, Hongli & Zhao, Jinhua & Kling, Catherine, 2002. "Time Path and Implementation of Carbon Sequestration (The)," Staff General Research Papers 5068, Iowa State University, Department of Economics.
  6. Farzin, Y. H., 1996. "Optimal pricing of environmental and natural resource use with stock externalities," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 31-57, October. [Downloadable!] (restricted)
  7. Edward L. Glaeser & Andrei Shleifer, 2001. "A Reason for Quantity Regulation," American Economic Review, American Economic Association, vol. 91(2), pages 431-435, May. [Downloadable!] (restricted)
  8. Millock, Katrin & Sunding, David & Zilberman, David, 2002. "Regulating Pollution with Endogenous Monitoring," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 221-241, September. [Downloadable!] (restricted)
  9. Khanna, Madhu & Isik, Murat & Zilberman, David, 2002. "Cost-effectiveness of alternative green payment policies for conservation technology adoption with heterogeneous land quality," Agricultural Economics, Blackwell, vol. 27(2), pages 157-174, August. [Downloadable!] (restricted)
  10. Jaffe Adam B. & Stavins Robert N., 1995. "Dynamic Incentives of Environmental Regulations: The Effects of Alternative Policy Instruments on Technology Diffusion," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages S43-S63, November. [Downloadable!] (restricted)
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