For example, discovery of new reserves, availability of substitutes, and recycling would reduce the scarcity rent and more efficient extraction technology would reduce the stock effect.
Mathematically, scarcity rent is the shadow price of the physical stock constraint given that a market equilibrium is defined as maximizing the sum of producer and consumer surplus.
for water: A valuation and pricing model.
In other words, the CAC quantity restriction must create the same kinds of scarcity rents
as tradeable permits, even with variable pollution per unit of output.
We would all pay scarcity rent
to them--trillions of dollars over the years.
then tend to flow upstream to the owners of the scarce inputs.
Finally, a constant optimal time path of the scarcity rent
requires that [lambda] = 0 Vt [epsiolon] [0, [infinity], so that one must have or upon differentiating the RHS and using (1)
The crucial distinction is not whether the environmental policy raises revenue, but whether it restricts the quantity of emissions in a way that creates a scarcity rent
that is left in private hands, rather than captured by government and used to offset the effect of higher output prices.
First, to the extent that advertisers fund programming, the lack of competition in this technological stage is a benefit: the public broadcaster earns scarcity rents
that defray the cost of Canadian programming.
This will lead to an excessive amount of effort on the part of the fishery, dissipating scarcity rents
, and resulting in depletion of the stock.
Also, a restriction on the absolute amount of pollution creates scarcity rents
, and thus raises the dirty sector's output price by more than a relative restriction on pollution per unit of output.
The point I want to emphasize is that, if LEMs do have this effect, the resulting increase in the demand for high-density housing will likely drive up the scarcity rents
for such locations.
If the permits go to the electric utility industry, then the scarcity rents
remain in private hands.