On the problem of optimizing through least cost per unit, when costs are negative: Implications for cost curves and the definition of economic efficiency

Fabian Levihn

Energy, 2016, vol. 114, issue C, 1155-1163

Abstract: For society and industry alike, efficient allocation of resources is crucial. Numerous tools are available that in different ways rank available options and actions under the aim to minimize costs or maximize profit. One common definition of economic efficiency is least cost per unit supplied. A definition that becomes problematic if cost take negative values. One model, where negative costs are not uncommon, is expert based/bottom up [marginal abatement] cost curves. This model is used in many contexts for understanding the impact of economic policy as well as optimizing amongst potential actions. Within this context attention has been turned towards the ranking problem when costs are negative.

Keywords: Economic efficiency; Marginal abatement cost curves; Investment optimization; Policy analysis (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0360544216312026
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:114:y:2016:i:c:p:1155-1163

DOI: 10.1016/j.energy.2016.08.089

Access Statistics for this article

Energy is currently edited by Henrik Lund and Mark J. Kaiser

More articles in Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().