Demand for and marginal cost of air-pollution abatement: an implicit market analysis

Thesis/Dissertation · Fri Jan 01 04:00:00 EST 1982

OSTI ID:5179468

Smith, H H

The demand for air-pollution abatement used the median voter model as its theoretical basis. A utility function for the median voter was devised with air-pollution abatement as one of the goods. This utility function also incorporated transpolitical boundary costs and benefits. Implicit prices were derived from the expenditure identity: price times quantity equals expenditures. Data on air-pollution abatement and expenditures for air-pollution abatement by state governments and two-digit SIC manufacturing industries were used. Only point-source manufacturing air pollutants were considered. The utility function was maximized subject to a budget constraint, and ordinary demand functions were derived. Econometric estimates of the demand and margin-cost equations were derived using two-stage least squares. The data were pooled time-series and cross-section observations of the fifty states of the United States for the period 1974 to 1978. Significant findings include low elasticity of demand for air-pollution abatement with respect to price (-0.17) and with respect to income (0.44). Also of note is the elasticity of demand with respect to income-distribution skewness (1.56) leading to the inference that those who are decisive in determining the level of air-pollution abatement benefit through cost shifting from skewed income distributions.

• OSTI ID: 5179468
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
290300 -- Energy Planning & Policy-- Environment
Health
& Safety
500600* -- Environment
Atmospheric-- Regulations-- (-1989)
54 ENVIRONMENTAL SCIENCES
AIR POLLUTION ABATEMENT
COST
DEMAND FACTORS
ECONOMIC ELASTICITY
INDUSTRY
LEAST SQUARE FIT
MAXIMUM-LIKELIHOOD FIT
NUMERICAL SOLUTION
POINT POLLUTANT SOURCES
POLLUTION
POLLUTION ABATEMENT
POLLUTION SOURCES
TRANSFRONTIER POLLUTION