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Dynamics Emission for a Polluting Industry

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  • Majid Ahmadian

    (Professor; Faculty of Economics, University of Tehran)

Abstract

This paper develops a dynamic theoretical model for a polluting industry to determine the emission dynamics, internalizing damage cost function along with production cost function, considering emission factor. It turns out that the competitive output price is composed of not only marginal production cost function but also marginal damage cost of emitting one emission unit multiplied by emission factor as well as the term indicated the pollution stock effects on the difference between damage cost function and the time derivative of implicit pollution price. Natural reductions in pollution as a proportion of decay factor lead to a fluctuations in the time paths of emission and its concentration, so that increasing marginal damage cost that it follows to strengthen social health and human welfare.

Suggested Citation

  • Majid Ahmadian, 2011. "Dynamics Emission for a Polluting Industry," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 16(3), pages 93-102, fall.
    • Handle: RePEc:eut:journl:v:16:y:2011:i:3:p:93
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    References listed on IDEAS

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    1. repec:bla:jindec:v:50:y:2002:i:3:p:265-87 is not listed on IDEAS
    2. Smith, Stefani C. & Yates, Andrew J., 2003. "Optimal pollution permit endowments in markets with endogenous emissions," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 425-445, November.
    3. Ian W.H. Parry, 2002. "Pollution Taxes and Revenue Reycling," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 15, pages 235-248, Edward Elgar Publishing.
    4. Munisamy Gopinath & JunJie Wu, 1999. "Environmental Externalities and the Optimal Level of Market Power," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 825-833.
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