According to current environmental policy theory, under perfect competition the firmʼs optimal level of emissions reduction is determined at the intersection of the marginal abatement cost (MAC) curve and the tax rate line. Behind these models, however, there are serious problems regarding market equilibrium theory and the definition of abatement cost.
This paper sheds light on these points, reexamines the concept of a firmʼs MAC, and proposes the newMAC. Using this newanalysis implement, it shows that the direct regulation is always not inefficient. We confirm that the environmental policy in China which used direct regulation and taxation based on this theoretical result can realize economic efficiency.
中国の環境政策と直接規制の効果
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02 中国の環境政策
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