Skip to main content
Article thumbnail
Location of Repository

The Theory of By-Production of Emissions and Capital-Constrained Non-Cooperative Nash Outcomes of a Global Economy

By Sushama Murty

Abstract

The reduced form approaches that are commonly adopted in the literature to model emission-generating technologies (EGTs) do not distinguish between emission-causing and non-emission causing goods in production. We provide a new set of axioms to describe EGTs. Technologies that satisfy these axioms are called by-production technologies (BPTs). A distance function representation of BPTs is derived and it is shown that a BPT can be decomposed into a standard neo-classical intended-production technology and nature's emission-generation set (the relationship in nature between emissions and emission-causing goods). As an illustrative application of the BP approach, we study cross-country differences in emission levels due to cross-country di erences in capital endowments at a noncooperative Nash equilibrium, where emissions impose both local and global externalities. The change in emission levels as we move from capital-poor to capital-rich countries is decomposed into income and substitution e ects. The latter are a result of changes in the trade-off between intended-production and emission-generation, which is attributed to diminishing returns to emission-causing inputs or cleaning-up activities, while the nature of the former is governed by the assumption that emission is an inferior good. The implications of increasing returns to capital, substitutability or complementarity between capital and emission-causing inputs such as fuels, extraction costs of fuels, and inter-fuel substitution in production are studied and a set of conditions that result in an environmental Kuznets curve is derived.distance function representation of multi-output technology, emission-generating technologies, free and costly disposability, environmental Kuznets curve, environmental externalities, non-cooperative Nash equilibrium, income and substitution effects, inferior good, returns to scale, inter-fuel substitution.

OAI identifier:

Suggested articles

Citations

  1. (iv) D2 is continuous in its arguments: Proof is similar to the continuity of the input distance function in F¨ are and Primont [1995]. Proof of Theorem (BP-REPR): (=⇒) Follows directly from Parts (ii) of Theorems
  2. (2011). 50The theory of by-production of emissions and capital-constrained non-cooperative Nash outcomes of a global economy.
  3. (2011). 51The theory of by-production of emissions and capital-constrained non-cooperative Nash outcomes of a global
  4. (2011). 54The theory of by-production of emissions and capital-constrained non-cooperative Nash outcomes of a global
  5. (2011). 55The theory of by-production of emissions and capital-constrained non-cooperative Nash outcomes of a global
  6. (2011). 57The theory of by-production of emissions and capital-constrained non-cooperative Nash outcomes of a global
  7. (2011). 58The theory of by-production of emissions and capital-constrained non-cooperative Nash outcomes of a global
  8. (2003). A Kuznets curve analysis of ozone-depleting substances and the Montreal protocol,” Oxford economic papers, 55: 1–24,
  9. (2011). and λ1 ≤ 1 imply that λ1 y λ1, z λ1 = y, z λ1 ∈ P(x,a). (iii) 52The theory of by-production of emissions and capital-constrained non-cooperative Nash outcomes of a global
  10. (1998). Are there limits to growth?”
  11. (2005). Characteristics of a polluting technology: theory and practice.”
  12. (1953). Cost and production functions.
  13. (2011). definition of λ1 implies that 1 κ y λ1, z λ1 / ∈ P(x,a) 53The theory of by-production of emissions and capital-constrained non-cooperative Nash outcomes of a global
  14. (1993). Derivation of shadow prices for undesirable outputs: a distance function approach.” The review of economics and statistics,
  15. (1998). Distance functions in consumer and producer theory,” Index numbers: essays in honor of
  16. (1978). Duality, separability, and functional structure: theory and economic applications,
  17. (1995). Economic growth and the environment,”
  18. (1994). Endogenous policy choice: the case of pollution and growth,” Review of economic dynamics,
  19. (1992). Environmental economics: a survey.”
  20. (2000). Environmental economics.
  21. (2007). Environmental efficiency measurement and the materials balance condition,”
  22. Externalities and fundamental nonconvexities: a reconciliation of approaches to general equilibrium externality modeling and implications for decentralization.”
  23. (2009). Good modelling of bad outputs: pollution and multiple-output production,” International review of environmental and resource economics, 3: 1–38,
  24. (2002). Measuring cost of environmentally sustainable industrial development in India: a distance function approach.” Environment and development economics, 7: 467–86,
  25. (1995). Multi-output production and duality : theory and applications, Kluwer academic publishers,
  26. (1989). Multilateral productivity comparisons when some outputs are undesirable: a nonparametric approach.” The review of economics and statistics,
  27. (2011). On modeling pollution-generating technologies,” Economics department discussion paper series No.
  28. On the theory of a firm: the case of by-production of emissions.” The Warwick economics research papers series,
  29. (1974). Prices vs. quantities,” The review of economic studies,
  30. (1978). Production economics: a dual approach to theory and applications,” North
  31. (1969). Production, consumption and externalities.”
  32. (1970). Quasi-separable preferences, costs, and technologies,”
  33. (2008). The design of post-Kyoto climate schemes: an introductory analytical assessment,” The Design of Climate Policy,
  34. (1979). The distance funciton in consumer behavior and applications to index numbers and optimal taxation,”
  35. (1999). The Impact of Environmental Constraints on
  36. (1996). The price of pollution: a dual approach to valuing SO2 allowances.”
  37. (2001). The simple analytics of the environmental Kuznets curve,”
  38. (1988). The theory of environmental policy, Second edition, Cambridge: Cambridge university press,
  39. (1965). Theory of Production.
  40. (2004). Willingness to pay for environmental quality: testable implications of the growth and environment literature,” Contributions to economic analysis and policy, 3: article 2,
  41. (2003). Win-Win Opportunities and Environmental Regulation: testing of Porter Hypothesis for Indian Manufacturing Industries.”

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.