Emission Targets and Equilibrium Choice of Technique
AbstractWe study the technological pre-conditions for a cost-minimizing choice of technique in the presence of government emission targets on by- products of production. Whether a by-product is a desirable commodity or an undesirable pollutant is determined endogeneously as part of the price-quantity equilibrium solution. Non-trivial counter-examples highlight the potential risk of over-ambitious pollution targets. We show that pollution targets can be supported by the appropriate taxes providing that technology allows for a certain type of labour-intensive pollution abatement activities. Our proof is constructive: the tax equilibria we posit can be computed by the Lemke Complementary Pivoting Algorithm.
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Bibliographic InfoPaper provided by EconWPA in its series GE, Growth, Math methods with number 0211001.
Length: 38 pages
Date of creation: 05 Nov 2002
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Note: Type of Document - pdf; prepared on pc; pages: 38
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Multisectoral Growth Theory; Choice of Technique; Pollution Taxes; Permit Markets; Lemke Algorithm;
Other versions of this item:
- Martin Diedrich, 2002. "Emission Targets and Equilibrium Choice of Technique," Keele Economics Research Papers KERP 2002/12, Centre for Economic Research, Keele University.
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-11-10 (All new papers)
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