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Environmental performance and equilibrium

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  • BRECHET, Thierry
  • MICHEL, Philippe

Abstract

Firms' or industries' ranking in terms of environmental performance may be influenced by equilibrium and not only by ex ante technological characteristics. We adopt a natural definition of relative eco-efficiency between two industries operating withinthe same environmental constraint: the more eco-efficient one is the one that has the higher output level. We compare the relative eco-efficiency of two technologies characterizing two industries, and then of two firms within the same industry. Weshow that all these comparisons depend, through the equilibrium, on the environmental constraint imposed at the industry level. We also show that firm's profitability at the equilibrium depends on its eco-efficiency, but also on its labour elasticity and permits allocation: the more eco-efficient firm is not necessarily the more profitable one.

Suggested Citation

  • BRECHET, Thierry & MICHEL, Philippe, 2004. "Environmental performance and equilibrium," CORE Discussion Papers 2004072, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2004072
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    References listed on IDEAS

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    6. Werner Antweiler, 2003. "How Effective Is Green Regulatory Threat?," American Economic Review, American Economic Association, vol. 93(2), pages 436-441, May.
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    Citations

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    Cited by:

    1. Thierry Bréchet & Pierre-André Jouvet, 2007. "A note the cost of pollution abatement," EconomiX Working Papers 2007-15, University of Paris Nanterre, EconomiX.
    2. Anderson, Simon P. & Gabszewicz, Jean J., 2006. "The Media and Advertising: A Tale of Two-Sided Markets," Handbook of the Economics of Art and Culture, Elsevier.
    3. Ala-Harja, Hanne & Helo, Petri, 2014. "Green supply chain decisions – Case-based performance analysis from the food industry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 69(C), pages 97-107.
    4. Chu, Hsun & Lai, Ching-chong, 2014. "Abatement R&D, market imperfections, and environmental policy in an endogenous growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 41(C), pages 20-37.
    5. Bréchet, Thierry & Jouvet, Pierre-André, 2008. "Environmental innovation and the cost of pollution abatement revisited," Ecological Economics, Elsevier, pages 262-265.
    6. BRECHET, Thierry & LY, Sylvette, 2010. "Technological greening, eco-efficiency, and no-regret strategy," CORE Discussion Papers 2010031, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Ala-Harja, Hanne & Helo, Petri, 2015. "Reprint of “Green supply chain decisions – Case-based performance analysis from the food industry”," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 74(C), pages 11-21.
    8. Thierry, BRECHET & Henry, TULKENS, 2006. "From BAT (best available technique) to BCAT (best combination of available techniques)," Discussion Papers (ECON - Département des Sciences Economiques) 2006060, Université catholique de Louvain, Département des Sciences Economiques.

    More about this item

    Keywords

    eco-efficiency; benchmarking; tradable permits;

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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