Centre for Development Economics
Department of Economics
Delhi School of Economics
ANNOUNCE A SEMINAR
Modelling Emission-Generating Technologies and Measuring Marginal Abatement Costs
by
Sushama Murty
(JNU)
(Thursday, November 6, 2025, at 3:10 PM, IST )
Venue: Amex Room
Abstract:-
We argue analytically that many commonly used models of pollution-generating technologies, which treat pollution as a freely disposable input or as a weakly disposable and null-joint output, may generate unacceptable implications for the trade-offs among inputs, outputs, and pollution. We show that the correct trade-offs in production are best captured if a pollution-generating technology is modelled as an intersection of an intended-production technology of the firm and nature’s residual-generation set. The former satisfies standard disposability properties, while the latter violates free disposability of pollution and pollution-causing inputs. As a result, the intersection—which we call a by-production technology—violates standard free disposability of pollution and pollution-causing inputs. We provide an application of this modelling approach for measuring firm-level and sectoral marginal abatement costs. The sectoral MAC represents the optimal emission tax or the equilibrium permit price in a market for tradable permits that can realise a given cap on sectoral emission.