Production Theory and Transformation Space

  • Horst Siebert


In the following four chapters, the static allocation aspect is analyzed. We study production theory, assuming emissions as joint outputs of production and treating environmental quality as a variable in the production set (chapter 3). After defining the production possibilities, we study which prices should be set in order to reach optimal results with respect to a welfare criterion. Also, we analyze whether optimality can be attained in a competitive equilibrium when environmental quality is taken into consideration (chapter 4). In chapter 5, we present the public-goods approach to environmental allocation. Benefit/cost analysis, the Lindahl solution, and institutional mechanisms which reveal individual preferences are discussed. Whereas the public-goods approach starts from the assumption that environmental quality cannot be attributed to individuals, the property-rights discussion stresses the point that the introduction of property rights may solve the allocation problem (chapter 6).


Production Function Environmental Quality Production Theory Damage Function Production Possibility 
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Copyright information

© Springer-Verlag Berlin Heidelberg 1987

Authors and Affiliations

  • Horst Siebert
    • 1
  1. 1.Lehrstuhl für internationale WirtschaftsbeziehungenUniversität KonstanzKonstanz 1Federal Republic of Germany

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