C H A P T E R 19 INTERNATIONAL AND INTERREGIONAL COMPETITION

ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

FIGURE 19.1

Output with two emisson levels,

E

2

> E

1

. K,

inputs of capital:

L,

inputs of labor;

E,

allowed emissions of pollution;

Y

, goods output.

ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

FIGURE 19.2

(a,b) Value marginal product of capital (

MP

K ), two emisson levels (

E

2

> E

1 ) and capital (

K

) as a function of the capital tax rate (

t

) and emission levels.

K

r T, amount of capital demanded with no tax on capital, emissions at

E

2 ;

K

r+t

,

amount of capital demanded with tax

t

on capital, emissions at

E

2 .

ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

FIGURE 19.3

Optimal levels of emissions (

E

) and per capita consumption (

C

) for different capital taxation rates (

t

). Equation (19.7) is feasible combinations of

C

and

E. BD,

feasible combinations of

C,E

with

t

= 0;

OA,

feasible combinations of

C,E

with

t

> 0;

VW,RS,

indifference curves for typical consumer; (

E

0 ,

L

0 ), efficient levels of

E

and

C, t

= 0; (

E

1

,C

1 ), efficient levels of

E

and

C

,

t

> 0.

ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

ENVIRONMENTAL ECONOMICS – 2e

FIGURE 19.4

Best response of domestic firm to foreign output levels.

Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.

ENVIRONMENTAL ECONOMICS

FIGURE 19.7

Payoff to IEA and fringe members as a function of IEA site.

– 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.