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Sunk costs and sunk benefits in environmental policy : I. basic theory

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dc.contributor.author Pindyck, Robert S. en_US
dc.contributor.other Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. en_US
dc.date.accessioned 2009-12-15T23:57:44Z
dc.date.available 2009-12-15T23:57:44Z
dc.date.issued 1995 en_US
dc.identifier 95003 en_US
dc.identifier.uri http://hdl.handle.net/1721.1/50181
dc.description.abstract The standard framework in which economists evaluate environmental policies is cost-benefit analysis, so that policy debates usually focus on expected costs and benefits, or on the choice of discount rate. But this framework can be misleading when there is uncertainty over future outcomes, when there are irreversibilities, and when policy adoption can be delayed. This paper shows how "economic" uncertainty (i.e., uncertainty over future costs and benefits of reduced environmental degradation) and "ecological" uncertainty (i.e., uncertainty over the evolution of an ecosystem) interact with two kinds of irreversibilities-- sunk costs associated with an environmental regulation, and "sunk benefits" of avoided environmental degradation-- to affect optimal policy timing and design. en_US
dc.description.sponsorship Supported by the National Science Foundation. Supported by the MIT Center for Energy and Environmental Policy Research, the MIT Program on Global Climate Change, and the U.S. Department of Energy. en_US
dc.format.extent 51 p en_US
dc.publisher MIT Center for Energy and Environmental Policy Research en_US
dc.relation.ispartofseries MIT-CEEPR (Series) ; 95-003WP. en_US
dc.title Sunk costs and sunk benefits in environmental policy : I. basic theory en_US
dc.type Working Paper en_US
dc.identifier.oclc 35719366 en_US


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