The General Equilibrium Incidence of Environmental Mandates

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Garth Heutel, Assistant Professor (Creator)
The University of North Carolina at Greensboro (UNCG )
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Abstract: Pollution regulations affect factor demands, relative returns, production, and output prices. In our model, one sector includes pollution as an input that can be a complement or substitute for labor or capital. For each type of mandate, we find conditions where more burden is on labor or on capital. Stricter regulation does not always place less burden on the better substitute for pollution. Also, restrictions on pollution per unit output create an "output-subsidy effect" on factor prices that can reverse the usual output and substitution effects. We find analogous effects for a restriction on pollution per unit capital.

Additional Information

American Economic Journal: Economic Policy 2 (August 2010): 64–89
Language: English
Date: 2010
Economic impact, Environmental mandate, Pollution

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