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Pollution Control in a Transition Economy: Do Firms Face Economies and/or Diseconomies of Scale?

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  • Dietrich Earnhart
  • Lubomir Lizal

Abstract

We empirically assess whether firms face economies and/or diseconomies of scale with respect to air pollution control by evaluating the effects of production on firmlevel air emission levels using a panel of Czech firms during the country’s transitional period of 1993 to 1998. By estimating a separate set of production-related coefficients for each individual sector, the analysis permits economies/diseconomies of scale to differ across sectors. More important, the analysis allows these scale effects to vary over time, which seems critical in the context of a transition economy, as the Czech government was tightening air protection polices by imposing more stringent emission limits and escalating emission charge rates. To assess whether these tighter policies expanded economies of scale, the analysis controls for heterogeneity across individual firms by examining intrafirm variation in emissions and production

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Bibliographic Info

Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp405.

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Date of creation: Feb 2010
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Handle: RePEc:cer:papers:wp405

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Keywords: Czech Republic; environmental protection; pollution; production; economies of scale.;

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  1. Khanna, Madhu & Quimio, Wilma Rose H. & Bojilova, Dora, 1998. "Toxics Release Information: A Policy Tool for Environmental Protection," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 243-266, November.
  2. Foulon, Jerome & Lanoie, Paul & Laplante, Benoit, 2002. "Incentives for Pollution Control: Regulation or Information?," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 169-187, July.
  3. Wang, Hua & Wheeler, David, 2005. "Financial incentives and endogenous enforcement in China's pollution levy system," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 174-196, January.
  4. Suits, Daniel B, 1984. "Dummy Variables: Mechanics v. Interpretation," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 177-80, February.
  5. Kiviet, Jan F., 1995. "On bias, inconsistency, and efficiency of various estimators in dynamic panel data models," Journal of Econometrics, Elsevier, Elsevier, vol. 68(1), pages 53-78, July.
  6. Dasgupta, Susmita & Lucas, Robert E.B. & Wheeler, David, 2002. "Plant size, industrial air pollution, and local incomes: evidence from Mexico and Brazil," Environment and Development Economics, Cambridge University Press, Cambridge University Press, vol. 7(02), pages 365-381, May.
  7. Khanna, Madhu & Damon, Lisa A., 1999. "EPA's Voluntary 33/50 Program: Impact on Toxic Releases and Economic Performance of Firms," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 1-25, January.
  8. Bluffstone, Randall, 1999. "Are the costs of pollution abatement lower in Central and Eastern Europe? Evidence from Lithuania," Environment and Development Economics, Cambridge University Press, Cambridge University Press, vol. 4(04), pages 449-470, October.
  9. Mickwitz, Per, 2003. "Is it as bad as it sounds or as good as it looks? Experiences of Finnish water discharge limits," Ecological Economics, Elsevier, Elsevier, vol. 45(2), pages 237-254, June.
  10. Konar, Shameek & Cohen, Mark A., 1997. "Information As Regulation: The Effect of Community Right to Know Laws on Toxic Emissions," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 109-124, January.
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Cited by:
  1. Kamil Galuscak & Lubomir Lizal, 2011. "The Impact of Capital Measurement Error Correction on Firm-Level Production Function Estimation," Working Papers, Czech National Bank, Research Department 2011/09, Czech National Bank, Research Department.

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