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Essays on Productive Efficiency, Shadow Prices, and Human Capital. PhD Thesis

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  • Marklund, Per-Olov

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    (Department of Economics, Umeå University)

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    Abstract

    This thesis consists of five papers, four of them basically concerning environmental issues, while the fifth paper addresses the issue of measuring output from the educational sector. The first paper starts from the fact that industrial activity causes environmental damage. Therefore, public authorities are called upon to regulate the behavior of producers by, e.g., legislating maximally allowed emission levels, which give rise to abatement costs. In this paper, marginal abatement costs (MACs) are estimated and a procedure to empirically analyze why MACs may vary between producers is suggested. The main focus is on whether the MACs in the Swedish pulp industry reveal that differences between counties in, e.g., economical characteristics, were influential when the authority, during 1983-1990, restricted 12 geographically scattered plants regarding emissions. The result indicates that county differences were influential. The second paper analyses and suggests a procedure for testing the Porter hypothesis. Part of this hypothesis is based on the argument that increased environmental stringency not only brings a cleaner environment, but also makes the polluting producers aware of the opportunity of using resources more efficiently. The particular test suggested considers whether there is a positive correlation between producers’ technical output efficiency and environmental stringency, approximated by a regulatory intensity index. It is empirically applied on 12 Swedish pulp plants during 1983-1990. No support for the Porter hypothesis is found in this particular case. The third paper deals with the climate policy issue. Under the Kyoto Protocol, the European Union agreed to reduce its emission of greenhouse gases by 8 percent in comparison with the level in 1990. The Burden-Sharing Agreement (BSA) further redistributes the 8 percent reduction target among the member states. This paper evaluates the BSA both from an economical and a political perspective, i.e., whether cost-efficiency and equity, respectively, were considered when the BSA was settled. The empirical result indicates that both efficiency and equity were considered as important to the BSA. The fourth paper evaluates the Swedish Producer Responsibility Ordinance (PRO), fully implemented in 1994, which states that sorted out, domestically collected waste paper, must be recycled by the paper industry and, therefore, cannot be incinerated by the heating industry in purpose of recovering energy. The result indicates that this policy has contributed to inefficient waste paper allocation among some of the paper producers. The result further indicates that the priority made by the PRO, i.e., that waste paper recycling is preferable to incineration, should be reconsidered. The fifth paper relates the empirical attempts of measuring output from the educational sector to theoretical results about the welfare significance of a comprehensive Net National Product (NNP) measure. It is shown that economic theory provides a more focused way of interpreting such output estimates. The paper also contains estimates of the output from the Swedish educational sector. Among the results, it is shown that the private gross output value produced by higher education is approximately 2 percent of GDP. Furthermore, the private rate of return on investments in higher education in Sweden is calculated to 8.6 percent.

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    Bibliographic Info

    Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 621.

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    Length: 28 pages
    Date of creation: 16 Feb 2004
    Date of revision:
    Handle: RePEc:hhs:umnees:0621

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    Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
    Phone: 090 - 786 61 42
    Fax: 090 - 77 23 02
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    Web page: http://www.econ.umu.se/
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    Related research

    Keywords: allocative efficiency; bad output; burden-sharing; cost-efficiency; environmental regulation; equity; greenhouse gas emission control; human capital; marginal abatement cost; parametric directional output distance function; percentile bootstrap; Porter hypothesis; private return from education; producer responsibility ordinance; technical efficiency; waste paper allocation;

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    References

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    1. Xepapadeas, Anastasios & de Zeeuw, Aart, 1999. "Environmental Policy and Competitiveness: The Porter Hypothesis and the Composition of Capital," Journal of Environmental Economics and Management, Elsevier, vol. 37(2), pages 165-182, March.
    2. Weitzman, Martin L, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, MIT Press, vol. 90(1), pages 156-62, February.
    3. Ahlroth, Sofia & Bjorklund, Anders & Forslund, Anders, 1997. "The Output of the Swedish Education Sector," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(1), pages 89-104, March.
    4. Ambec, Stefan & Barla, Philippe, 2002. "A theoretical foundation of the Porter hypothesis," Economics Letters, Elsevier, vol. 75(3), pages 355-360, May.
    5. JAY S. COGGINS & John R. Swinton, 1994. "The Price of Pollution: A Dual Approach to Valuing SO2 Allowances," Wisconsin-Madison Agricultural and Applied Economics Staff Papers 378, Wisconsin-Madison Agricultural and Applied Economics Department.
    6. Fare, Rolf, et al, 1993. "Derivation of Shadow Prices for Undesirable Outputs: A Distance Function Approach," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 374-80, May.
    7. Adam Jaffe & Richard Newell & Robert Stavins, 2002. "Environmental Policy and Technological Change," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 41-70, June.
    8. Thomas Aronsson & Karl-Gustaf Löfgren, 1995. "National product related welfare measures in the presence of technological change: Externalities and uncertainty," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 5(4), pages 321-332, June.
    9. Mohr, Robert D., 2002. "Technical Change, External Economies, and the Porter Hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 158-168, January.
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