CHAPTER4
EFFICIENCY AND MARKETS
ENVIRONMENTAL ECONOMICS – 2e
Charles D. Kolstad
Copyright © 2011 by Oxford University Press, Inc.
FIGURE 4.1 Pareto frontier and efficiency.
ENVIRONMENTAL ECONOMICS – 2e
Charles D. Kolstad
Copyright © 2011 by Oxford University Press, Inc.
FIGURE 4.2 Utility maximizing choice of wine and garbage disposal services. CD, mixtures of
the basket C (all garbage disposal) and the basket D (all wine); X*, choice point.
ENVIRONMENTAL ECONOMICS – 2e
Charles D. Kolstad
Copyright © 2011 by Oxford University Press, Inc.
FIGURE 4.3 Edge worth box characterization of wine-garbage disposal bargaining. A, initial endowment; AGBCE, points of Pareto
impovement over A; XGEY, contract curve; GE, portion of contract curve that improves on A.
ENVIRONMENTAL ECONOMICS – 2e
Charles D. Kolstad
Copyright © 2011 by Oxford University Press, Inc.
FIGURE 4.4 Market equilibrium in garbage disposal–wine bargain. A, initial endowment; GE, portion of contract curve that improves
on A; X*, market outcome with initial allocation at A; AD, budget constraint.
ENVIRONMENTAL ECONOMICS – 2e
Charles D. Kolstad
Copyright © 2011 by Oxford University Press, Inc.
FIGURE 4.5 Efficiency in production.
ENVIRONMENTAL ECONOMICS – 2e
Charles D. Kolstad
Copyright © 2011 by Oxford University Press, Inc.
FIGURE 4.6 Marginal costs of emission reductions in 2010 relative to 1990 emissions.
(Adapted from Hourcade et al., 1996, p. 318.)
ENVIRONMENTAL ECONOMICS – 2e
Charles D. Kolstad
Copyright © 2011 by Oxford University Press, Inc.
FIGURE 4.7 Supply, demand, and surplus measures in the market for garbage disposal
services. g*, market equilibrium quantity of garbage disposal; g1, too little garbage
disposal; g2, too much garbage disposal.
ENVIRONMENTAL ECONOMICS – 2e
Charles D. Kolstad
Copyright © 2011 by Oxford University Press, Inc.