Issue in pollution control: interplant cost differences and economies of scale.

Seeks evidence concerning the issues of the relative efficiencies of different institutional arrangements for pollution control and the implications of control requirements for economies of scale and barriers to entry. Data is derived from the estimation of a production function for 30 pulp and paper mills in Wisconsin and Michigan. Concludes that the systematic differences in marginal treatment costs for different mills are evidence of serious inefficiencies resulting from the current (US) system of pollution control regulation. The positive association of pollution control intensity with economies of scale suggests that any pollution control regime has some negative allocational effects in this industry (and presumably others). -K.Turner