Pollution and the Firm

Pollution and the Firm is an important book which presents new concepts of the marginal cost of substituting non-pollutive for pollutive goods. Technical in its approach it complements the other literature in the field and will be a significant contribution to the understanding of microeconomic issues in pollution control. The book focuses on three main concepts: substitutions in consumption, emission abatement and exposure avoidance. The first part considers the adjustment of the scope and combination of goods produced as a method for controlling pollution. The author argues that pollution is controlled by increasing the relative price of the polluting good in the production process; thereby reducing demand and subsequent production of the good. In the second part the discussion is extended to include the possibilities of preventing or abating emissions in relation to three models: first, pollution prevention when non-polluting inputs and processes are substituted for pollutants; second, when a proportion of the polluting output is recycled rather than being discarded; and finally end-of-pipe abatement where additional technology is used. In conclusion the author assesses the extent to which pollution damage is controlled by avoidance of emissions, with avoidance being modelled as an add-on technology with its own returns to scale. This important book combines theories of the firm with a welfare economics approach to pollution control, and will be welcomed by environmental and resource economists as well as microeconomists with an interest in environmental issues.