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The Rate of Emission and the Optimal Scale of the Polluting Firm
Robert E. Kohn
The Canadian Journal of Economics / Revue canadienne d'Economique
Vol. 19, No. 3 (Aug., 1986), pp. 574-581
Stable URL: http://www.jstor.org/stable/135351
Page Count: 8
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Empirical evidence suggests that in some cases, average emissions may decrease and then increase with the polluting firm's level of output. If the U-shaped average emission curve bottoms out at the same output at which the U-shaped average cost of production curve bottoms out, the efficient scale of the polluting firm is the same with a Pigouvian tax as without the tax. In such a case total emissions of the polluting industry are proportional to the total output of the industry, and the results derived in Kohn (1985) for a constant rate of emissions hold.
The Canadian Journal of Economics / Revue canadienne d'Economique © 1986 Canadian Economics Association