On the theory of a firm : The case of by-production of emissions
Five attributes of emission generating technologies are identified and a concept of byproduction is introduced, which implies these five attributes. Murty and Russell  characterization of technologies, which requires distinguishing between intended production of firms and nature's laws of emission generation, is shown to be both necessary and sufficient for by-production. While intended production could be postulated to satisfy standard input and output free-disposability, these will necessarily be violated by nature's emission generation mechanism, which satisfies costly disposability of emission as defined in Murty . Marginal technical and economic costs of abatement are derived for technologies exhibiting by-production. A simple model of by-production illustrates that, while common abatement paths considered in the literature do involve a technological trade off between emission reduction and intended production, there also almost always exist abatement paths where it is possible to have both geater emission reductions and greater intended outputs. Further, marginal abatement costs will usually be decreasing in the initial level of emissions of firms. Counterintuitive as these results may sound in the rst instance, they are intuitively obvious in the by-production approach as it is rich enough to incorporate both standard economic assumptions with respect to intended production of firms and the rules of nature that govern emission generation.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +44 (0) 2476 523202
Fax: +44 (0) 2476 523032
Web page: http://www2.warwick.ac.uk/fac/soc/economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sushama Murty & R. Robert Russell & Steven B. Levkoff, 2011.
"On modeling pollution-generating technologies,"
1101, Exeter University, Department of Economics.
- Murty, Sushama & Russell, R. Robert, 2010. "On modeling pollution-generating technologies," The Warwick Economics Research Paper Series (TWERPS) 931, University of Warwick, Department of Economics.
- Fare, Rolf, et al, 1989. "Multilateral Productivity Comparisons When Some Outputs Are Undesirable: A Nonparametric Approach," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 90-98, February.
- 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.
- 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.
- Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
- Milleron, Jean-Claude, 1972. "Theory of value with public goods: A survey article," Journal of Economic Theory, Elsevier, vol. 5(3), pages 419-477, December.
When requesting a correction, please mention this item's handle: RePEc:wrk:warwec:934. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Helen Neal)
If references are entirely missing, you can add them using this form.