Output, emissions, and technology: Some thoughts

The principal goal of this article is to identify the implications of a binding emission constraint on a firm’s optimal capital–labor ratio and to determine whether it is appropriate to write a firm’s production function as an increasing function of its emissions alone. I find that even though a firm’s supply curve may be written as a positive function of its emissions, it is not appropriate to write the production technology as an increasing function of only its emissions, except under special circumstances.