Limited applicability of Marshallian economics to the problem of pollution abatement: a suggested alternative

Journal Article · Sun Jan 01 04:00:00 EST 1978 · J. Econ. Bus.; (United States)

OSTI ID:7061043

Kochanowski, P ^[1]; Witte, J G; Henneberry, B

---

1. Indiana Univ., South Bend

Relying on the theoretical framework developed in their earlier paper, ''Partial-Equilibrium Bias in the Economics of Pollution Abatement and a Method for Quantitative Estimation,'' Public Finance-Finances Publiques, 31:235-64 (2, 1976), but with additional data on pollution-abatement investment which permits accurate segregation of the economy into a polluting and nonpolluting sector, the authors provide estimates indicating that the partial-equilibrium method in fact does result in a substantial systematic understatement of the socially-optimal effluent charge by as much as 50%. In effect, a formal statement of the difference is obtained between partial- and general-equilibrium tax rates, first, as a function of the impact of the tax on input markets and input rewards, and ultimately, through use of general-equilibrium analysis as a function of the characteristics of polluting and nonpolluting sectors. The final step in arriving at conclusions on the pervasiveness of the Marshallian bias is the estimation of values for the parameters of the two-sector, two-factor general-equilibrium model.

• OSTI ID: 7061043
• Journal Information: J. Econ. Bus.; (United States), Journal Name: J. Econ. Bus.; (United States) Vol. 30:3; ISSN JEBUD
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
290300* -- Energy Planning & Policy-- Environment
Health
& Safety
CHARGES
ECONOMICS
ECONOMY
FEEDBACK
FORECASTING
OPTIMIZATION
POLLUTION
POLLUTION ABATEMENT
REGULATIONS
TARIFFS
TAXES