Ambivalent Joint Production and the Natural Environment: An Economic and Thermodynamic Analysis

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 Thunen: 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.