Template-Type: ReDIF-Article 1.0

Author-Name: Katalin Hartung
Author-Workplace-Name: University of Pécs
Author-Email: hartungk@ktk.pte.hu

Title: Optimal Resource Allocation at the Blue Economy Type of Firms

Abstract: This article attempts to model the optimal resource allocation and the definition
of firm’s internal transfer prices of aiming to minimise their environmental impact.
The author defines the concept of zero waste principle, also referred to as the
blue economy principle, with the help of the linear activity analysis model. She
demonstrates that if the firm cannot operate the technology which applies the zerowaste
principle, then a firm can realise profit only by polluting the environment.
She also shows how the internal transfer price of a by-product can be quantified
and can take both a negative or positive value as well; thereby, promoting an open
market driven by the objective of the blue economy. Finally, she also demonstrates
that shadow prices relating to emission constraints may serve as the basis for
environmental penalties motivating firms to restrain from environmental pollution.

Classification-JEL: C65, Q56
Keywords: internal transfer price, resource allocation, environmental impact, zero
waste principle, environmental penalty
Pages: 98–118
Volume: 16
Issue: 3
Year: 2017
File-URL: http://english.hitelintezetiszemle.hu/letoltes/katalin-hartung.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:16:y:2017:i:3:p:98-118