POLLUTION ABATEMENT COST FUNCTION: METHODOLOGICAL AND ESTIMATION ISSUES

Bishwanath Goldar and Badal Mukherji
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Bishwanath Goldar: Delhi School of Economics
Badal Mukherji: Delhi School of Economics

No 56, Working papers from Centre for Development Economics, Delhi School of Economics

Abstract: Fonnulation and estimation of a correctly specified abatement cost function would be the comer stone of sound policy regarding imposing taxes or user fees as well as of sharing social cost in the presence of environmental pollution. Often in recent research the output of an abatement activity for water pollution appears to us not to have been clearly specified. This activity is very distinct from that of whatever is the actual product of the plant. We propose in this paper that the output is only and exclusively the reduction in the level of the pollutant (per litre) in the inflow to the plant and demonstrate that with this definition a well behaved cost function can be derived and estimated.

Pages: 22 pages
Date: 1998-03
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