Scandinavian Working Papers in Economics

Oslo University, Department of Economics

No 10/2016: Pollution Modelling and Multiple-Output Production*

Finn Førsund ()
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Finn Førsund: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway

Abstract: The Memorandum was originally published as Finn R. Førsund, “Pollution Modelling and Multiple-Output Production Theory” Discussion Paper #D- 37/1998, Department of Economics and Social Sciences, Agricultural University of Oslo. The materials balance principle points to the crucial role of material inputs in generating residuals in production processes. Pollution modelling must be of a multi-output nature. The most flexible transformation function in outputs and inputs used in textbooks is too general to make sense in pollution modelling. Specifying bads as if they are inputs, although defendable on a macro Level, hides explicit considerations of various modification activities. A complete taxonomy of inputs as to the impact on both residuals and marketed Products as joint outputs, is derived, based on factorially determined multi-output Production, thus providing information for choice of policy instruments.

Keywords: multiple-output Production; factorially determined multi output production; pollution; bads; purification; modification

JEL-codes: D62; Q50

27 pages, December 23, 1998

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