On the existence of an effluent charge paradox

Alfred Endres

No 15, Discussion Papers, Series B from University of Konstanz, Department of Economics

Abstract: Effluent charges are discussed as a means for reducing pollution. In a comparative static model, the long run adjustment of a perfectly competitive industry to a change in the effluent charge rate is analyzed. The industry is assumed to have a flexible pollution abatement technology. It turns out that .interdependencies between production and abatement processes may make the industry increase pollution when the effluent charge rates are increased.

Date: 1981
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