How can market structure of Pollution production markets, Pollution reduction markets, and Pollution management markets be represented analytically?

Market for pollution can be represented analytically or in an econometric model to be suitable for estimation by following these two theories of pollution; the neoclassical theory by (AC Pigou, Marshall and Ronald Coase) and Materials-Balance theory by Ayres and Kness and Ayres and D'Arge. I also suggest this model to capture the effect of pollution which is adapted from the work Biala and Babatunde (2010), Externality effects of sachet water consumption and the choice of policy instrument in Nigeria: Evidence from Kwara state. In their study they adopted the model of Cropper and Oates (1992). The model goes thus: U= U(X, Q); X= X(L, E, Q); and Q=Q(E)

U= utility,

X= bundle of goods,

Q= level of pollution,

E= waste emision, and

L= bundles of convectional inputs like capital and labour.

Good day Yusuf, thank you for writing.

The context on which this question is based is:

“In a world with two components, the economy and the environment such as the world of environmentally dirty markets, the nature of each component in any model determines the nature of that market…”

And based on this context the question is: How can the market structure of Pollution production markets, Pollution reduction markets, and Pollution management markets be represented analytically?

They are 3 different types of markets, different model/market structure, different price structure, different choice structure, and different cost structure. But the question for simplicity is focused only on their different market structure and how to represent it analytically...

If you would like to share your ideas on how this question can be answered, please do it.

Respectfully yours;

Lucio