Abstract
We identify and analyse several dynamic implications of setting environmental standards such as to 'balance' marginal costs and benefits. The adoption of such a regulatory approach is shown to effect (i) the speed of improvement of abatement technologies; (ii) the 'direction' (in a sense to be defined) of that improvement; (iii) its source and the distribution of the rents from it; and (iv) the rate of development of defensive (averting) technologies. Existing views are thoroughly synthesised in the context of a simple diagrammatic model, several new results are derived and at least one conventional wisdom questioned. The message of the analysis for legislators and regulators is that cost-benefit balancing should be done with care.
Original language | English |
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Pages (from-to) | 493-507 |
Number of pages | 15 |
Journal | Environmental and Resource Economics |
Volume | 9 |
Issue number | 4 |
DOIs | |
Publication status | Published - 1997 |
Keywords
- Cost-benefit analysis
- Environmental regulation
- Technical change
ASJC Scopus subject areas
- Economics and Econometrics
- Management, Monitoring, Policy and Law