Disaster-Prone Technologies, Environmental Risks, and Profit Maximization
This paper presents a model of short-run profit maximization by an industrial firm utilizing a disaster-prone technology. The firm's decisions about output rate and accident prevention activities are shown to be jointly determined by market demand, production cost, and prospective accident loss data. Various institutional reasons are given for believing that, in the absence of government safety regulations, even a risk-neutral management is likely to choose an excessively high probability of a Bhopal-style disaster. Copyright 1988 by WWZ and Helbing & Lichtenhahn Verlag AG
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Volume (Year): 41 (1988)
Issue (Month): 3 ()
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