Theory

Firm reaction to CO$_2$ abatement policies

How do we expect firms to react when faced with an increased cost of polluting? This post reflects on a recent Pluto.jl notebook I wrote, looking at how we can solve for a firm’s optimal CO2 abatement choices in light of different government policies.

The post is inspired by a long-lasting interest in understanding how to solve optimisation problems in economics programmatically. The question was then applied to a topic which I find interesting, namely, how environmental policy can affect firm choices.