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Extending the cost function: A simple method of modeling environmental regulation

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  • Udo Ebert

    (University of Oldenburg)

Abstract

The paper shows that a variety of different scenarios in environmental economics can be modeled by one abstract concept, an extended cost function, which takes into account a firm's technological and regulatory constraints. It satisfies the usual properties of a cost function and reasonable properties with respect to the regulatory parameter. An extended cost function represents a simple unified approach which does not depend on the specific form of regulation and the way emissions are modeled.

Suggested Citation

  • Udo Ebert, 2006. "Extending the cost function: A simple method of modeling environmental regulation," Economics Bulletin, AccessEcon, vol. 17(6), pages 1-6.
    • Handle: RePEc:ebl:ecbull:eb-06q20006
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    References listed on IDEAS

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    1. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, September.
    2. Helfand, Gloria E, 1991. "Standards versus Standards: The Effects of Different Pollution Restrictions," American Economic Review, American Economic Association, vol. 81(3), pages 622-634, June.
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    More about this item

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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