Efficient scale of the pollution-abating firm: comment

In a recent issue of Land Economics, Kohn (1988) used a simple general equilibrium model to analyze the efficient scale of output for perfectly competitive firms whose pollution has a negative effect on another industry. Under Kohn's definition of returns to scale, increasing returns in abatement mean that increasing the gross pollution alone will increase the fraction of pollution eliminated. However, it can be shown that his situation leads to the untenable conclusion that the total costs of abatement are a negative function of the volume of pollution treated, ceteris paribus. Further, it appears that many processes aimed at reducing the damages caused by a given concentration of ambient pollution have similar characteristics to those designed to reduce the amount of pollutants escaping into the environment in the first place. In a reply, Kohn agrees that Harford is correct in faulting the eclectic classification of abatement functions in Kohn's study.