Least-Cost Air Pollution Control: A CGE Joint Production Framework

Abstract

Abstract This study proposes a new, more flexible approach to modeling pollution abatement activities within the CGE framework, one that treats the problem as an issue of the joint production of "good" and "bad" outputs. More specifically, this study employs a joint production technology to derive the production possibilities frontier for those industries producing both "good" and "bad" outputs. This avoids some of the difficulties associated with attempting to model separate technologies for production of the good output and pollution abatement activities. We demonstrate an application of the CGE model by estimating the cost associated with not pursuing least-cost strategies for abating air pollutants in the United States. 1 Throughout this study, the "good" output is the marketed output produced by an industry and the "bad" outputs are pollutants emitted by an industry