Factor market distortions and backward incidence of pollution control |
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Authors: | Hamid Beladi Subarna K Samanta |
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Affiliation: | (1) Economics Department, Central Michigan University, 48859 Mt. Pleasant, MI, USA |
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Abstract: | This paper analyzes the backward incidence of stronger pollution control into factors of production using a two-sector general equilibrium model in which the economy experiences perfect capital mobility but norigid factor price differential. In this context we conclude that higher levels of wage and capital rental differentials may act as an effective control over the pollution emission in the economy when factor price differentials directly depend on the pollution level. |
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