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Environmental performance and equilibrium

Author

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  • BRECHET, Thierry
  • MICHEL, Philippe

Abstract

. In this paper we show why firms' or industries' rankings in terms of environmental performance depend not only on the technology but also on market equilibrium. Between two industries committed to the same environmental constraint, the more eco‐efficient is the one with the higher output level. By comparing industries and firms, we show that the rankings are not robust, for they are affected by market outcome. The role of eco‐efficiency in firms' profitability in equilibrium is also scrutinized. All this shows that the usual eco‐efficiency indicators are inadequate. To tackle this problem, we propose a sound indicator. Dans cet article nous montrons pourquoi les classements de firmes ou d'industries en terme d'éco‐efficacité dépendent non seulement de la technologie, mais aussi de l'équilibre des marchés. Entre deux industries soumises à la même contrainte environnementale, la plus éco‐efficace est celle ayant le niveau de production le plus élevé. En comparant des industries et des firmes, nous montrons que les classements ne sont pas robustes, car ils sont affectés par l'équilibre du marché. Le rôle de l'éco‐efficacité dans la profitabilité de la firme est également analysé. Tout ceci révèle que les indicateurs habituels d'éco‐efficacité sont inadaptés. Pour faire face à ce problème, nous proposons un indicateur robuste.
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Suggested Citation

  • BRECHET, Thierry & MICHEL, Philippe, 2007. "Environmental performance and equilibrium," LIDAM Reprints CORE 2056, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2056
    DOI: 10.1111/j.1365-2966.2007.00443.x
    Note: In : Canadian Journal of Economics/Revue canadienne d'Economique, 40(4), 1078-1099, 2007
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    1. Karen Palmer & Wallace E. Oates & Paul R. Portney & Karen Palmer & Wallace E. Oates & Paul R. Portney, 2004. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 3, pages 53-66, Edward Elgar Publishing.
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    Cited by:

    1. Thierry Bréchet & Pierre-André Jouvet, 2007. "A note the cost of pollution abatement," Working Papers hal-04139224, HAL.
    2. Thierry Bréchet & Sylvette Ly, 2013. "The many traps of green technology promotion," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(1), pages 73-91, January.
    3. Anderson, Simon P. & Gabszewicz, Jean J., 2006. "The Media and Advertising: A Tale of Two-Sided Markets," Handbook of the Economics of Art and Culture, in: V.A. Ginsburgh & D. Throsby (ed.), Handbook of the Economics of Art and Culture, edition 1, volume 1, chapter 18, pages 567-614, Elsevier.
    4. Ala-Harja, Hanne & Helo, Petri, 2014. "Green supply chain decisions – Case-based performance analysis from the food industry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 69(C), pages 97-107.
    5. Chu, Hsun & Lai, Ching-chong, 2014. "Abatement R&D, market imperfections, and environmental policy in an endogenous growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 41(C), pages 20-37.
    6. Bréchet, Thierry & Jouvet, Pierre-André, 2008. "Environmental innovation and the cost of pollution abatement revisited," Ecological Economics, Elsevier, vol. 65(2), pages 262-265, April.
    7. BRECHET, Thierry & LY, Sylvette, 2010. "Technological greening, eco-efficiency, and no-regret strategy," LIDAM Discussion Papers CORE 2010031, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. Laforest, Valérie, 2014. "Assessment of emerging and innovative techniques considering best available technique performances," Resources, Conservation & Recycling, Elsevier, vol. 92(C), pages 11-24.
    9. Ala-Harja, Hanne & Helo, Petri, 2015. "Reprint of “Green supply chain decisions – Case-based performance analysis from the food industry”," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 74(C), pages 11-21.
    10. Thierry, BRECHET & Henry, TULKENS, 2006. "From BAT (best available technique) to BCAT (best combination of available techniques)," Discussion Papers (ECON - Département des Sciences Economiques) 2006060, Université catholique de Louvain, Département des Sciences Economiques.

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    More about this item

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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