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Prices of Goods' and ‘Bads’: An Application of the Ricardian Theory of Differential Rent
Authors:Christian  Lager
Institution:Department of Economics , University of Graz , Resowi-Zentrum F4, Universit?tsstrasse 15, Graz, A-8010, Austria Phone: 43 316 380 3455 Fax: 43 316 380 3455 E-mail: christian.lager@kfunigraz.ac.at
Abstract:Pollutants, wastes and scrap appear as joint products of consumption or production processes. Leontief and other authors extend input–output (IO) tables such that additional products and industries, respectively, account for pollutants and abatement activities; they also analyze the effects of pollution control policies, by means of traditional IO methods. This approach does not account for choice of technique and, therefore, neglects the possibility of substitution. This paper proposes to utilize Ricardo's theory of differential rent, which is based on the possibility of coexisting technical alternatives.
Keywords:Pollution and cost of abatement  Ricardian rent  choice of technique
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