Pollution Reduction: A Pedagogic Note

Peter Tisato and Nathan Porter

The Economic Record, 1996, vol. 72, issue 219, 341-344

Abstract: The paper presents a new graphical analysis of how a profit‐maximizing firm will respond when required to control pollution. The focus is on graphical presentations which attempt to integrate the two pollution reduction responses open to the firm: output reduction, and use of abatement technology. We argue that existing approaches are deficient, failing to accurately illustrate the firm's optimal pollution reduction response. An alternative graphical presentation, using families of iso profit, iso pollution, and iso tax expenditure curves is developed which successfully illustrates the optimal response.

Date: 1996
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