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Estimation of the value of the marginal product of emission in a country where emissions output is regulated — an empirical study

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  • Max Keilbach

Abstract

Emissions resulting from the production process can be characterized as “use of the elimination and disposal services of the ecological system”. Hence, they are “use of natural resources” and thus an input to production. The present paper discusses an approach to evaluate the returns of these kind of services as a production factor. First, four main types of industrial emission are chosen —SO 2 ,CO 2 ,NO x andparticulate matter — and integrated in a Cobb-Douglas production function. With this approach, the production elasticities and the marginal product of these types of emission can be estimated. Based on these results and assuming that marginal product equals price, the demand curve for emission is estimated. With this demand curve the consequences of different kinds of environmental policy are considered. Under further assumptions of optimal behaviour it can be shown that the demand curve for emission is equal to the curve of marginal costs of avoidance (MCA). Thus, the estimates of the demand curves can be considered as estimates of the MCA-curves. Furthermore the price elasticities of these four types of emission are estimated with this approach. The method used in the paper is suggested for calibration of CGE models. Copyright Kluwer Academic Publishers 1995

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  • Max Keilbach, 1995. "Estimation of the value of the marginal product of emission in a country where emissions output is regulated — an empirical study," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 5(3), pages 305-319, April.
    • Handle: RePEc:kap:enreec:v:5:y:1995:i:3:p:305-319
    DOI: 10.1007/BF00691522
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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 9780521311120.
    2. K. Sato, 1967. "A Two-Level Constant-Elasticity-of-Substitution Production Function," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 34(2), pages 201-218.
    3. Peter Hoeller & Markku Wallin, 1991. "Energy Prices, Taxes and Carbon Dioxide Emissions," OECD Economics Department Working Papers 106, OECD Publishing.
    4. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249.
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    1. repec:ipg:wpaper:2014-479 is not listed on IDEAS
    2. Jonathan E. Leightner & C.A. Knox Lovell, 1998. "Weather and Pollution Abatement Costs," The Energy Journal, , vol. 19(2), pages 165-189, April.
    3. repec:ipg:wpaper:2014-491 is not listed on IDEAS
    4. Aiken, Deborah Vaughn & Pasurka, Carl Jr., 2003. "Adjusting the measurement of US manufacturing productivity for air pollution emissions control," Resource and Energy Economics, Elsevier, vol. 25(4), pages 329-351, October.
    5. Sung-Hyun Jun & Jee Young Kim & Hyungna Oh, 2021. "Evaluating the impact of the KETS on GHG reduction in the first phase," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(3), pages 613-638, July.
    6. Leightner, Jonathan E. & Inoue, Tomoo, 2008. "Capturing climate's effect on pollution abatement with an improved solution to the omitted variables problem," European Journal of Operational Research, Elsevier, vol. 191(2), pages 540-557, December.
    7. Wang, Chunhua & Wu, JunJie & Zhang, Bing, 2018. "Environmental regulation, emissions and productivity: Evidence from Chinese COD-emitting manufacturers," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 54-73.
    8. Leightner, Jonathan E., 1999. "Weather-induced changes in the tradeoff between SO2 and NOx at large power plants," Energy Economics, Elsevier, vol. 21(3), pages 239-259, June.
    9. Liu, Liwei & Sun, Xiaoru & Chen, Chuxiang & Zhao, Erdong, 2016. "How will auctioning impact on the carbon emission abatement cost of electric power generation sector in China?," Applied Energy, Elsevier, vol. 168(C), pages 594-609.
    10. Fare, Rolf & Grosskopf, Shawna & Pasurka, Carl Jr., 2007. "Pollution abatement activities and traditional productivity," Ecological Economics, Elsevier, vol. 62(3-4), pages 673-682, May.

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