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Why environmental regulation may lead to no-regret pollution abatement?

  • Thierry Bréchet
  • Pierre-André Jouvet

Empirical evidence support the existence of pollution abatement possibilities at negative costs, the so-called 'no-regret options'. We provide a microeconomic rationale for the existence of such potential at the firm's level under environmental regulation. An econometric application confirms that marginal pollution abatement cost curves with no-regret options are compatible with a standard production function, as stated in our theoretical model.

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File URL: http://economix.fr/pdf/dt/2006/WP_EcoX_2006-12.pdf
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Paper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2006-12.

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Length: 20 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:drm:wpaper:2006-12
Contact details of provider: Postal: 200 Avenue de la République, Bât. G - 92001 Nanterre Cedex
Web page: http://economix.frEmail:


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  1. Ambec, Stefan & Barla, Philippe, 2005. "Can Environmental Regulations be Good for Business? an Assessment of the Porter Hypothesis," Cahiers de recherche 0505, Université Laval - Département d'économique.
  2. Karen Palmer & Wallace E. Oates & Paul R. Portney, 1995. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 119-132, Fall.
  3. Pierre-André Jouvet & Philippe Michel & Gilles Rotillon, 2004. "Optimal growth with pollution : how to use pollution permits ?," Cahiers de la Maison des Sciences Economiques v04012, Université Panthéon-Sorbonne (Paris 1).
  4. Stokey, Nancy L, 1998. "Are There Limits to Growth?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 1-31, February.
  5. Isaksson, Lena Hoglund, 2005. "Abatement costs in response to the Swedish charge on nitrogen oxide emissions," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 102-120, July.
  6. Barbera, Anthony J. & McConnell, Virginia D., 1990. "The impact of environmental regulations on industry productivity: Direct and indirect effects," Journal of Environmental Economics and Management, Elsevier, vol. 18(1), pages 50-65, January.
  7. Worcester, Dean A, Jr, 1969. "Pecuniary and Technological Externality, Factor Rents, and Social Costs," American Economic Review, American Economic Association, vol. 59(5), pages 873-85, December.
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