Pollution Abatement Under Learning by Doing with Heterogeneous Costs

U of Maryland, Agricultural and Resource Economics Working Paper No. 02-05

51 Pages Posted: 24 Jun 2002

See all articles by Yann Bramoulle

Yann Bramoulle

University of Toulouse I - LEERNA-INRA

Lars J. Olson

University of Maryland - Department of Agricultural & Resource Economics

Date Written: April 2002

Abstract

Many environmental policies including the Kyoto Protocol, the Acid Rain Program, the Montreal Protocol and the phase-out of leaded gas are designed to achieve a target level of abatement within a specified period of time. This paper examines how pollution abatement should be allocated over time using heterogeneous technologies characterized by learning by doing. In the presence of learning by doing, conventional economic wisdom regarding the allocation of pollution abatement must be modified. This paper derives the appropriate generalization of the principle that marginal abatement costs are equalized and shows how learning by doing alters the optimal allocation of abatement. The paper considers three classes of abatement cost functions: linear costs, convex costs and constant elasticity costs. The optimal solution is derived for linear and constant elasticity costs. In the case of convex costs sufficient conditions are given for abatement to be shared across all technologies and a bound is placed on the optimal cumulative abatement that occurs over any interval [0,t]. The results are used to provide insight into the effects of technological learning on pollution abatement policy, the tradeoffs involved in allocating abatement between mature and infant technologies, and the role played by abatement costs and discounting in determining how pollution abatement should be allocated over time and across technologies.

Keywords: environmental policy, pollution abatement, technological change, learning by doing

JEL Classification: O3, Q2

Suggested Citation

Bramoulle, Yann and Olson, Lars J., Pollution Abatement Under Learning by Doing with Heterogeneous Costs (April 2002). U of Maryland, Agricultural and Resource Economics Working Paper No. 02-05, Available at SSRN: https://ssrn.com/abstract=313646 or http://dx.doi.org/10.2139/ssrn.313646

Yann Bramoulle

University of Toulouse I - LEERNA-INRA ( email )

21, Allee de Brienne
31000 Toulouse
France
33 5 6112 8517 (Phone)
33 5 6112 8520 (Fax)

Lars J. Olson (Contact Author)

University of Maryland - Department of Agricultural & Resource Economics ( email )

2200 Symons Hall
College Park, MD 20742-5535
United States
301-405-7180 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
83
Abstract Views
988
rank
350,233
PlumX Metrics