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abatement becomes path adverse environmental impacts amount of effort assume Clifford F coordination problem cost of pollution dirty inputs disutility downstream firm duction dynamics of environmental economic effort required employees engineering efficiency environment environmental regulation environmentally favorable project example expected profit experience of Dow explanation firm's profit flow of project free lunches full information given project Harvard University Hewlett Packard implement improve industrial ecology INCENTIVE STRUCTURE increase industrial ecology carries investment level of pollution maintain manager utility manager and sharehold manager's utility function Marginal cost marginal damage maximize social welfare MC curve network externalities non-discretionary activities number of projects oligopolistic opportunity cost order-preserving Panayotou Clifford F pollution abatement becomes pollution control pollution tax potential projects Principal-agent problems production profitable environmental projects profitable projects project proposals recycled REGULATION DYNAMICS Risk aversion section 2.1 shareholders offer socially optimal level uncertainty upstream sector waste well-managed firm zero