Effluent Regulation and Long Run Optimality, Journal of Environmental Economics and Management
The long-run efficiency properties of regulatory instruments are examined in a multiple-input framework. The effluent tax and tradeable permit are shown to be efficient with free entry and exit of small firms. The across-the-board effluent standard results in excessive entry and excessive industry pollution.
Spulber, Daniel. 1985. Effluent Regulation and Long Run Optimality. Journal of Environmental Economics and Management. 12(2): 103-116.