We generalize the marginal abatement cost function concept by adding a secondary market option for the firm's emissions. From that baseline, we analyze the conditions under which the secondary market will lie dormant and strategies for efficiently activating them. We feature two contexts that are of increasing interest in the engineering and energy literatures but that are under-discussed in the economics literature: waste heat utilization from processes such as computer data centers and energy production from CO2 emission feedstock via artificial photosynthesis. Our main result is that the secondary market price for waste residuals can reduce uncontrolled emissions in the absence of an emission price instrument such as a tax. If an emission tax is already in place, we show that secondary waste market revenue reduces the efficient tax—and under certain conditions can completely replace the tax. Moreover, our model provides microeconomic support for evolutionary ecological economics perspectives and Circular Economy perspectives on how markets can be tuned to ‘waste’ less waste via policies that strengthen secondary market development.

中文翻译：

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次级废物市场的边际减排成本函数


我们通过为公司的排放增加二级市场选项来推广边际减排成本函数概念。从该基线出发，我们分析了二级市场处于休眠状态的条件以及有效激活它们的策略。我们介绍了两个在工程和能源文献中越来越受到关注但在经济学文献中未得到充分讨论的背景：计算机数据中心等过程的废热利用和通过人工光合作用从 CO2 排放原料中生产能源。我们的主要结果是，在没有排放价格工具（如税收）的情况下，废物残余物的二级市场价格可以减少不受控制的排放。如果排放税已经到位，我们表明二次废物市场收入会降低有效税，并且在某些条件下可以完全取代该税。此外，我们的模型为进化生态经济学观点和循环经济观点提供了微观经济支持，即如何通过加强二级市场发展的政策来调整市场以减少“浪费”废物。