ABSTRACT
This chapter offers the theoretical foundation of a standard economics approach to pollution control. When waste emissions are viewed as a ‘tradable commodity’ in a free-market setting (to be discussed in Chapter 6), the pollution control and pollutiondamage cost functions, explored at some length in this chapter, would literally represent the ordinary supply and demand functions for pollution permits (rights), respectively. Furthermore, it is important to develop a very good understanding of the pollutiondamage function and its determinants before embarking on the ‘valuation’ of the environment-a subject to be covered in Chapter 7.
