TY - JOUR
T1 - Environmental regulation and optimal investment behavior. A micro-economic analysis
AU - Kopp, Raymond J.
AU - Smith, V. Kerry
N1 - Funding Information:
*Fellow, Quality of the Environment Division, Resources for the Future, and Professor of Economics, University of North Carolina at Chapel Hill, North Carolina, respectively. Thanks are due Thomas G. Cowing, Todd Sandler, and an anonymous referee for most helpful comments on an earlier draft of this paper. Smith’s research was partially supported by the John Simon Guggenheim Memorial Foundation. ‘See Haveman (1977) for a detailed review of these studies.
PY - 1980/6
Y1 - 1980/6
N2 - This paper develops a simple optimal control model of the firm's investment decisions in the presence of environmental restrictions. The firm is assumed to jointly decide the optimal levels of gross investment, scrappage of capital, and maintenance expenditures. The results of the model indicate that all investment decisions, including both abatement equipment and productive capital, are affected by the manner in which environmental regulations are designed. Moreover, these impacts can be further altered if other unrelated regulations, such as rate base regulation, are concurrently imposed on the firm.
AB - This paper develops a simple optimal control model of the firm's investment decisions in the presence of environmental restrictions. The firm is assumed to jointly decide the optimal levels of gross investment, scrappage of capital, and maintenance expenditures. The results of the model indicate that all investment decisions, including both abatement equipment and productive capital, are affected by the manner in which environmental regulations are designed. Moreover, these impacts can be further altered if other unrelated regulations, such as rate base regulation, are concurrently imposed on the firm.
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U2 - 10.1016/0166-0462(80)90027-7
DO - 10.1016/0166-0462(80)90027-7
M3 - Article
AN - SCOPUS:0019187490
VL - 10
SP - 211
EP - 224
JO - Regional Science and Urban Economics
JF - Regional Science and Urban Economics
SN - 0166-0462
IS - 2
ER -