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On the properties of an emission-generating technology and its parametric representation

  • Sushama Murty

    (Department of Economics, University of Exeter)

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    We propose a set of comprehensive axioms that seek to capture our intuitive understanding of the properties of an emission-generating technology (EGT). We show that an EGT that satis es these axioms can be parametrically represented by more than one implicit production function that are derived from it. Here, these production functions take the form of distance functions rst introduced by Shephard [1953] and Malmquist [1953]. One of these production relations has properties of a neo-classical production function that shows how standard inputs are transformed into standard (intended) outputs. The remaining re ect trade-o s, observed in nature, between emissions, emission-causing goods, and cleaning-up activities of the producing unit. We illustrate this by considering two cases: (i) where each type of cleaning-up activity jointly mitigates all types of emissions and (ii) where cleaning-up activities are emission-speci c allowing also for the possibility that a cleaning-up activity while helping to reduce certain emissions, can also contribute to more of some other types of emissions.

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    Paper provided by Exeter University, Department of Economics in its series Discussion Papers with number 1202.

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    Date of creation: 2012
    Date of revision:
    Handle: RePEc:exe:wpaper:1202
    Contact details of provider: Postal: Streatham Court, Rennes Drive, Exeter EX4 4PU
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    1. Fare, Rolf & Grosskopf, Shawna & Noh, Dong-Woon & Weber, William, 2005. "Characteristics of a polluting technology: theory and practice," Journal of Econometrics, Elsevier, vol. 126(2), pages 469-492, June.
    2. Murty, M.N. & Kumar, Surender, 2002. "Measuring the cost of environmentally sustainable industrial development in India: a distance function approach," Environment and Development Economics, Cambridge University Press, vol. 7(03), pages 467-486, July.
    3. Boyd, John III & Conley, John P., 1997. "Fundamental Nonconvexities in Arrovian Markets and a Coasian Solution to the Problem of Externalities," Journal of Economic Theory, Elsevier, vol. 72(2), pages 388-407, February.
    4. 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.
    5. Murty, Sushama, 2010. "Externalities and fundamental nonconvexities: A reconciliation of approaches to general equilibrium externality modeling and implications for decentralization," Journal of Economic Theory, Elsevier, vol. 145(1), pages 331-353, January.
    6. Hailu, Atakelty & Veeman, Terrence S., 2000. "Environmentally Sensitive Productivity Analysis of the Canadian Pulp and Paper Industry, 1959-1994: An Input Distance Function Approach," Journal of Environmental Economics and Management, Elsevier, vol. 40(3), pages 251-274, November.
    7. Boyd, Gale A. & McClelland, John D., 1999. "The Impact of Environmental Constraints on Productivity Improvement in Integrated Paper Plants," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 121-142, September.
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