Which bad is worst?: An application of Johansen's capacity model
2013 (English)Report (Other academic)
The production of desirable (good) outputs is frequently accompanied by unintended production of undesirable (bad) outputs. If two or more of these undesirable outputs are produced as byproducts, one may ask: ‘Which bad is worst?’ By worst we mean which bad inhibits the production of desirable outputs the most if it is regulated. We develop a model based on Leif Johansen’s capacity framework by estimating the capacity limiting effect of the bads. Our model resembles what is referred to as the von Liebig Law of the Minimum, familiar from the agricultural economics literature. To illustrate our model we apply our approach to a firm level data set from the Swedish paper and pulp industry.
Place, publisher, year, edition, pages
Umeå: Department of Economics, Umeå University , 2013. , 20 p.
, CERE Working Paper / CERE arbetsrapport, 2013:2
von Liebig Law of the Minimum, DEA, emissions, regulation
Economics Earth and Related Environmental Sciences
IdentifiersURN: urn:nbn:se:umu:diva-88446OAI: oai:DiVA.org:umu-88446DiVA: diva2:715703
FunderSwedish Energy Agency