Effluent charges are discussed as a means for reducing pollution. In a comparative static model, the long run adjustment of a perfectly competitive industry to a change in the effluent charge rate is analyzed. The industry is assumed to have a flexible pollution abatement technology. It turns...

The response of a monopolistic polluter to the imposition of an emission tax and its welfare implications are examined. The cases of output reduction as the sole means for pollution control and of additional means being feasible are considered. It turns out that in the second case the tax may...