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BOD 7 production function of the Finnish pulp and paper industry

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  • Minna-Maari Karvonen

Abstract

Traditional neoclassical production theory analyzes the relationship in a production process between inputs and outputs which have a positive market value for the producer. The externalities of production, which have nonpositive market values, are discarded or included as the cost in a cost function. This paper studies the relationship between biological oxygen demand (BOD) emissions, an output of nonpositive value, and traditional factors of production, that is, investments, labor, output, and raw materials. An emissions production function is theoretically presented and empirically estimated with data from the Finnish pulp and paper industry. The approach is based on the observation that it is the minimization of effluents rather than, or together with, the maximization of yields, that increasingly defines the technological frontier of production processes. The empirical function estimation demonstrates the validity of the proposed novel modeling approach. Copyright International Atlantic Economic Society 2001

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  • Minna-Maari Karvonen, 2001. "BOD 7 production function of the Finnish pulp and paper industry," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 7(3), pages 310-326, August.
    • Handle: RePEc:kap:iaecre:v:7:y:2001:i:3:p:310-326:10.1007/bf02295400
    DOI: 10.1007/BF02295400
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    Cited by:

    1. Alfredsson, Eva & Månsson, Jonas & Vikström, Peter, 2016. "Internalising external environmental effects in efficiency analysis," Economic Analysis and Policy, Elsevier, vol. 51(C), pages 22-31.

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