Effects of Air Quality Regulation

J. Vernon Henderson

American Economic Review, 1996, vol. 86, issue 4, 789-813

Abstract: This paper examines the effects of ground-level ozone regulation on economic activity. Regulatory effort varies by county attainment status and state attitudes. A switch from attainment to nonattainment status induces greater local regulatory effort, leading to air quality improvement, ceteris paribus, and an exit of polluting industries. Polluting industries spread out, moving from nonattainment (polluted) to attainment (initially less polluted) areas. Localities can improve hourly extreme-value readings, which trigger regulatory activity, without improving measures of typical conditions(for example, daily medians) by spreading economic activity over the day to dampen daily ozone peaks. Copyright 1996 by American Economic Association.

Date: 1996
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