Estimating the Non-Environmental Consequences of Greenhouse Gas Reductions is Harder Than You Think

30 Jun Estimating the Non-Environmental Consequences of Greenhouse Gas Reductions is Harder Than You Think

“Estimating the Non-Environmental Consequences of Greenhouse Gas Reductions is Harder Than You Think” Contemporary Economic Policy 17, 1999

Abstract

Top-down and bottom-up models of the non-environmental consequences of policies to reduce greenhouse gas emissions embody different implicit theories of economic organizations. Yet neither approach is explicit in showing the detailed computations that must be traced if the activities of firms are to be described realistically. Specification of firms’ computational processes leads inevitably to a consideration of potential computational limits on the behavior of organizations. It is known that solutions of some standard economic problems are not effectively computable, and that the solutions to others are computationally intractable. These fundamental computational limits have strong implications for the theory of the firm, and recognizing their existence and importance suggests new policy approaches for reducing greenhouse gas emissions.