Willingness to Pay for Clean Air: Evidence from Air Purifier Markets in China

Koichiro Ito and Shuang Zhang

Journal of Political Economy, 2020, vol. 128, issue 5, 1627 - 1672

Abstract: We develop a framework to estimate willingness to pay for clean air from defensive investments on differentiated products. Applying this framework to scanner data on air purifier sales in China, we find that a household is willing to pay $1.34 annually to remove 1 µg/m3 of air pollution (PM10) and $32.7 annually to eliminate the pollution induced by the Huai River heating policy. Substantial heterogeneity is explained by income and exposure to information on air pollution. Using these estimates, we evaluate various environmental policies and quantify the value of recent air quality improvements since China declared a war on pollution in 2014.

Date: 2020
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Related works:
Working Paper: Willingness to Pay for Clean Air: Evidence from the air purifier markets in China (2016)
Working Paper: Willingness to Pay for Clean Air: Evidence from Air Purifier Markets in China (2016)
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