Disequilibrium and Indivisibility of Pollution Control Equipment Under a Permit-Trading System: A Case Study of Kao-Hsiung and Ping-Tung Counties in Taiwan |
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| Authors: | Chao-ning Liao Hayri Önal |
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| Institution: | (1) Department of Economics, National Cheng-Kung University, Tainan, Taiwan;(2) Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, Urbana, IL, USA |
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| Abstract: | A mixed-integer programming model that minimizes the social abatement cost is used to investigate whether a market equilibrium
condition could be reached in a newly proposed permit-trading market for nitrogen oxide control in Taiwan. Unlike in previous
studies, unit pollution abatement cost is determined endogenously by incorporating technology adoption as a binary decision
variable. The results show that when technologies are lumpy and irreversible, disequilibrium might occur due to firms’ inability
to manage their emission levels after installing equipment with fixed size and control capacity.
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| Keywords: | Disequilibrium Tradable permits Mixed-integer programming Nitrogen oxide |
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