Journal
CANADIAN JOURNAL OF ECONOMICS-REVUE CANADIENNE D ECONOMIQUE
Volume 36, Issue 4, Pages 860-883Publisher
UNIV TORONTO PRESS INC
DOI: 10.1111/1540-5982.t01-3-00004
Keywords
-
Categories
Ask authors/readers for more resources
Optimal decisions of a firm facing the option of retrofitting its plant to reduce pollution and thereby eliminate the need to purchase emissions allowances are analysed. The decision is treated as a real option with the price of pollution permits following a known stochastic process. The model is formulated as a set of one-dimensional partial differential equations. At discrete points in time, the firm owner makes optimal decisions about the retrofit, including whether to mothball temporarily. The model is used to analyse a firm's decision to instal a scrubber as a result of the 1990 U.S. Clean Air Act.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available