Abstract
Due to concern for the state of the environment, the federal government passed laws forcing industry to accomodate the wishes of environmentalists. In particular the Clean Air Standards Act imposed a measure of air pollution and dictated an upper bound on the amount of allowable air pollution in terms of this standard. This paper attempts to investigate the impact of such a law in the context of a two firm world. In the model each firm produces output and pollution so as to maximize profit. The pollution of all firms together is the variable which comes under constraint of the law. The model of this economy turns out to be a non-zero sum two firm differential game, and the solution (Nash equilibrium) can be characterized. To obtain more concrete results with respect to the impact of the law on the firms' output and hiring of inputs, a simulation of the model is attempted.
Recommended Citation
Hoag, John H. and Reed, J. David, "Economic Aspects of Imposed Air Standards" (1976). UMR-MEC Conference on Energy / UMR-DNR Conference on Energy. 147, pp. 360-367.
https://scholarsmine.mst.edu/umr-mec/147
Meeting Name
3rd Annual UMR-MEC Conference on Energy (1976: Oct. 12-14, Rolla, MO)
Document Type
Article - Conference proceedings
Session
Energy and the Environment
Document Version
Final Version
File Type
text
Language(s)
English
Rights
© 1977 University of Missouri--Rolla, All rights reserved.
Publication Date
12 Oct 1976
