Ambivalent Joint Production and the Natural Environment

1 Introduction.- 1.1 The issue under study.- 1.1.1 Joint production.- 1.1.2 Joint products and the natural environment.- 1.1.3 Ambivalence of joint products.- 1.1.4 Dynamic economy-environment interactions.- 1.1.5 The state of knowledge and ignorance.- 1.2 Scope and method of analysis.- 1.2.1 Defining the basic terms.- 1.2.2 Scope of analysis.- 1.2.3 Aim of this work.- 1.2.4 Environmental Economics and Ecological Economics.- 1.2.5 An interdisciplinary approach.- 1.2.6 Analytical features.- 1.3 Preview of the argument.- I The Phenomenon of Joint Production.- 2 Joint production and the natural environment.- 2.1 The macro-dimension of joint production.- 2.2 The cogeneration of electricity and heat: Ambivalence of joint products.- 2.3 The impact of joint products over time.- 2.3.1 Flow pollution vs. stock pollution.- 2.3.2 The emission of carbon dioxide, methane and nitrous oxide: The anthropogenic greenhouse effect.- 2.3.3 The emission of sulfur dioxide: Acid rain.- 2.3.4 The impact of joint products over time: Conclusion.- 2.4 Sulfuric acid: Joint products as the origin of structural change.- 2.5 Conclusion.- 3 Thermodynamics.- 3.1 Phenomenological thermodynamics.- 3.1.1 Thermodynamic systems.- 3.1.2 Conservation of energy.- 3.1.3 Conservation of matter.- 3.1.4 Degradation of energy.- 3.2 Statistical mechanics.- 3.2.1 Boltzmann's notion of entropy.- 3.2.2 Phenomenological versus statistical view.- 3.3 Time-irreversibility.- 3.3.1 Reversible time.- 3.3.2 Time-irreversibility in isolated systems: heat death.- 3.3.3 Time-irreversibility in open systems: complexity through self-organization.- 3.3.4 Thermodynamics and time-irreversibility.- 3.4 Conclusion.- 4 All production is joint production.- 4.1 The fundamental factors of production.- 4.2 The thermodynamic view of production.- 4.2.1 Production as a transformation of energy and matter.- 4.2.2 First and Second Law constraints.- 4.2.3 A 'toy model' of industrial production processes.- 4.2.4 Joint production as a consequence of the First Law.- 4.2.5 Joint production as a consequence of the Second Law.- 4.2.6 Some comments on the generality of the employed toy model.- 4.3 Implications and applications of the model.- 4.3.1 Relationship among the joint outputs.- 4.3.2 Relationship among the inputs.- 4.3.3 Substitutability vs. complementarity of inputs.- 4.3.4 Relationship between inputs and outputs and thermo-dynamic limits to technical progress.- 4.4 Conclusion.- II The Analysis of Joint Production in the History of Economic Thought.- 5 The classical position and its early critics.- 5.1 Adam Smith: The case of joint production requires special patterns of explanation.- 5.2 John Stuart Mill: Demand and supply.- 5.3 Conclusion.- 6 The abandonment of classical theory.- 6.1 Johann Heinrich von Thünen: Ambivalent joint production.- 6.2 Karl Marx: Joint products as waste.- 6.3 William Stanley Jevons: Marginal utility explains the demand for joint outputs.- 6.4 Conclusion.- 7 Neoclassical theory from partial to general equilibrium analysis.- 7.1 Alfred Marshall: Substitution in supply.- 7.2 Heinrich von Stackelberg: Analogies to the case of single production.- 7.3 John von Neumann: Duality of process intensities and prices.- 7.4 Arrow/Debreu: The production set.- 7.5 Welfare analysis: Harmful joint outputs.- 7.6 Conclusion.- 7A Von Neumann's model of linear production.- 8 The role of joint production for the construction of economic theory.- 8.1 Summary of chapters 5 to 7.- 8.2 Critical appraisal.- 8.2.1 Empirical relevance.- 8.2.2 Analytical treatment.- 8.3 Interpretation.- 8.3.1 Two different strategies for the construction of economic theory.- 8.3.2 The structuralist research program.- 8.4 Conclusion.- III The Economics of Ambivalent Joint Production.- 9 The concept of joint production.- 9.1 The notion of joint production in the literature.- 9.1.1 Joint production in the economic literature.- 9.1.2 Joint production in the business administration literature.- 9.2 A formal definition of joint production.- 9.2.1 Definition.- 9.2.2 Properties of the definition.- 9.3 Subjective elements in the description of production.- 9.3.1 The observer's interest: Is really all production joint production?.- 9.3.2 The valuation by economic agents: Why is the production process carried out?.- 9.3.3 Conceptual separation between the description of production and the valuation of outputs by economic agents.- 9.4 Aspects of joint production.- 9.4.1 Fixed and flexible joint production.- 9.4.2 Ambivalent joint production.- 9.5 Conclusion.- 10 Ambivalence of joint products.- 10.1 A model with joint externalities.- 10.1.1 Specification of the model.- 10.1.2 The transformation curve.- 10.1.3 Optimal allocation and shadow prices.- 10.1.4 Ambivalence of the intermediate product (I).- 10.2 Solution of the model.- 10.2.1 Scenario 1: No emissions.- 10.2.2 Scenario 2: Final emissions.- 10.2.3 Scenario 3: Joint emissions.- 10.3 Summary of model results.- 10.3.1 Optimal a.- 10.3.2 Ambivalence of the intermediate product (II).- 10.4 Environmental policy with joint emissions.- 10.4.1 Regulation under complete knowledge.- 10.4.2 Incomplete knowledge and learning by doing.- 10.5 Conclusion.- 10.5.1 What determines the value of joint outputs?.- 10.5.2 The implication for environmental policy.- 10.5.3 The implication for economic modeling.- 10A Determining equation for ?.- 10B Solution for the three scenarios.- 10B.1 Solution in scenario 1.- 10B.2 Solution in scenario 2.- 10B.3 Solution in scenario 3.- 11 Joint products and irreversibility.- 11.1 Notions of irreversibility in production theory.- 11.1.1 Thermodynamic irreversibility.- 11.1.2 Koopmans' notion of irreversibility.- 11.1.3 Debreu's notion of irreversibility.- 11.1.4 Dated goods vs. complete representations.- 11.2 Production and capital accumulation.- 11.2.1 Reversible capital theory.- 11.2.2 Joint products and irreversible capital accumulation.- 11.3 Economic and thermodynamic views on irreversibility.- 11.4 Conclusion.- 12 Non-convexity of the production set.- 12.1 Detrimental joint products and negative externalities.- 12.1.1 Competing uses of the environment.- 12.1.2 A simple model of a two-sector-economy.- 12.2 Baumol type externalities.- 12.2.1 The argument of Baumol and Bradford.- 12.2.2 Formal analysis of the transformation curve.- 12.2.3 Generalization to n production processes.- 12.3 Different types of externalities.- 12.3.1 Different types of negative externality.- 12.3.2 Two examples.- 12.3.3 Different types of non-convexity.- 12.3.4 Negative externalities and non-convexities: summary.- 12.4 The consequences of a non-convex production possibility set.- 12.4.1 Non-convexity at the level of individual firms and at the level of the economy.- 12.4.2 Existence of a general competitive equilibrium.- 12.4.3 First welfare theorem.- 12.4.4 Second welfare theorem.- 12.4.5 Second order conditions: Welfare maximum or minimum?.- 12.5 Conclusion.- 12A Properties of the inverse production functions.- 13 Ambivalent joint production: Putting the issues in perspective.- References.- List of Figures.- List of Tables.