Environment, irreversibility and optimal effluent standards *

Abstract

The present article investigates the use of performance standards to correct environmental externalities. Each firm in an industry emits waste in the production process, and, in turn, the average waste emissions of the industry adversely affect the firm's productivity. The firm, which incurs sunk costs when employing capital to abate waste emissions, is uncertain about the efficiency of capital. The firm will underestimate environmental externalities and will therefore pollute more than is socially efficient. To correct this tendency, the regulator can set a limit on either emissions or the emission-output ratio at the socially efficient level. The firm will invest more, produce more, and pollute less when the regulator implements the former than when the regulator implements the latter.

Green innovation and ecological footprint relationship for a sustainable development: Evidence from top 20 green innovator countries

“…On the other hand, degrowth strategy of ecological economics, mainly refers to the need reducing global consumption and production and supporting a socially and ecologically sustainable society, underlines that green growth strategies may not be sufficient to cope with ecological threats and economies should limit their growth (D'Alisa & Kallis et al, 2018;Kerschner et al, 2018;Weiss & Cattaneo, 2017). Further, degrowth discourses are based on the irreversibility principle of environmental degradation and claim that technological progress cannot be a solution because of the irreversible impacts on the ecosystem (Berta et al, 2021;Jou, 2008;Missemer, 2017;O'Connor, 1993). However, despite the serious concerns raised by degrowth discourses, green growth attempts have become the best alternative for economies since degrowth philosophy, unfortunately, has not been sufficiently supported by decision-makers in real life (Sandberg et al, 2019).…”

The regulation of optimal development density

“…We abstract from these price control instruments, and instead focus only on density ceiling control. By following the literature that applies non-cooperative dynamic games to environmental management (see, e.g., Jou, 2001Jou, , 2004, we model density ceiling control as a hierarchical game. At the lower level of the game, landowners compete for the choices regarding the date and the scale of land development in a Cournot-Nash environment.…”