The control of environmental pollution and optimal investment and employment decisions

This Comment is to point out that a recent paper by Lin on pollution control contains some errors in applying and analysing the maximum principle conditions. Furthermore, some questions concerning the validity of the model are raised. The problem addressed is certainly an important one, but the model formulation seems somewhat questionable. The main problem of pollution control is that reduction of pollution is costly. However, in Lin’s formulation the firm incurs high adjustment costs if the firm does nothing to control pollution, while no costs are involved if extensive cleaning efforts lead to no additional pollution. [See IAOR 37578.]