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Optimal pollution level: a theoretical identification

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  • George Halkos
  • Christos Kitsos

Abstract

In this paper, the optimal pollution level is identified under the assumptions of linear, quadratic and exponential cost functions. The corresponding optimal level of environmental policy is evaluated, with analytical forms in the linear and quadratic case, while in the exponential case, these values are obtained approximately. It is shown that, in principle, its existence obeys certain restrictions, which are investigated here. The evaluation of the benefit area is discussed and analytical forms for this particular area are calculated. The positive point, at least from a theoretical point of view, is that both the quadratic and the exponential case obey the same form when evaluating the benefit area. These benefit area evaluations can be used as indexes between different rival policies, and certainly the policy that produces the maximum area is the most beneficial policy.

Suggested Citation

  • George Halkos & Christos Kitsos, 2005. "Optimal pollution level: a theoretical identification," Applied Economics, Taylor & Francis Journals, vol. 37(13), pages 1475-1483.
    • Handle: RePEc:taf:applec:v:37:y:2005:i:13:p:1475-1483
    DOI: 10.1080/00036840500193625
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    References listed on IDEAS

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    1. Halkos, George, 1994. "A game-theoretic approach to pollution control problems," MPRA Paper 33259, University Library of Munich, Germany.
    2. Edward B. Barbier, 1998. "The Economics of Environment and Development," Books, Edward Elgar Publishing, number 1363.
    3. Veijo Kaitala & Matti Pohjola & Olli Tahvonen, 1992. "Transboundary air pollution and soil acidification: A dynamic analysis of an acid rain game between Finland and the USSR," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(2), pages 161-181, March.
    4. George Halkos, 1996. "Incomplete information in the acid rain game," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 23(2), pages 129-148, June.
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    Cited by:

    1. Halkos, George & Petrou, Kleoniki Natalia, 2018. "A critical review of the main methods to treat undesirable outputs in DEA," MPRA Paper 90374, University Library of Munich, Germany.
    2. Halkos, George & Kitsos, Christos, 2018. "Mathematics vs. Statistics in tackling Environmental Economics uncertainty," MPRA Paper 85280, University Library of Munich, Germany.
    3. Halkos, George & Kitsou, Dimitra, 2014. "A weighted location differential tax method in environmental problems," MPRA Paper 59502, University Library of Munich, Germany.
    4. Halkos, George, 2013. "Uncertainty in optimal pollution levels: Modeling the benefit area," MPRA Paper 47768, University Library of Munich, Germany.
    5. George E. Halkos & Dimitra C. Kitsou, 2018. "Weighted location differential tax in environmental problems," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(1), pages 1-15, January.
    6. Halkos, George & Kitsos, Christos, 2018. "Uncertainty in environmental economics: The problem of entropy and model choice," Economic Analysis and Policy, Elsevier, vol. 60(C), pages 127-140.

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