Impact of Income Inequality on Urban Air Quality: A Game Theoretical and Empirical Study in China

Feng Wang, Jian Yang, Joshua Shackman and Xin Liu
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Feng Wang: Department of Applied Economics, School of Economics and Business Administration, Chongqing University, Chongqing 400044, China
Jian Yang: Department of Applied Economics, School of Economics and Business Administration, Chongqing University, Chongqing 400044, China
Joshua Shackman: International Business and Logistics Faculty, California State University Maritime Academy, Vallejo, CA 945900, USA
Xin Liu: Department of Applied Economics, School of Economics and Business Administration, Chongqing University, Chongqing 400044, China

IJERPH, 2021, vol. 18, issue 16, 1-17

Abstract: Income inequality and environmental pollution are of great concern in China. It is important to better understand whether the narrowing of income inequality and environmental improvement contradict each other. The study aims to investigate the linkage between income inequality and environmental pollution. To illustrate the interplay between different income groups on environmental issues, we apply a mixed-strategy game. Based on the game-theoretic analytical result, the probability of residents supporting clean energy and environmental protection decreases as income inequality widens and increases as inequality narrows. This empirical study is based on the proportion of coal consumption and urban air pollution data from 113 key environmental protection cities and regions in China. The air quality data are from the National Environmental Air Quality Monitoring Network published in the China Statistical Yearbook from 2014–2018. Convincing results show that regions with higher income inequality suffer severe smog and related pollution and that economies with narrow income disparity experience significant improvements in smog and pollution control, with the expansion of the proportion of clean energy use. The results also provide no evidence of the impact of per capita income on pollution. We studied the relationship between individuals of different wealth levels within an economy, within a repeated-game setting. The finding suggests that the distribution of growth impacts pollution. Imposing higher taxes on air polluters while transferring the revenue to the lower-income group is suggested.

Keywords: income inequality; air pollution; environmental awareness; mixed-strategy games (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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