Shadow Market Area for Air Pollutants
AbstractThis study identifies the shadow market area of air pollutants based on the Gaussian plume model. Since pollutants are dispersed by wind, transport costs are irrelevant in its formation. Pollutant distribution on the ground level has an asymmetric bell-shape in the wind direction. Apart from the linear functions, the exponential and quadratic shadow price functions are considered for the compensation of health hazard of consumers, when the strict liability in the framework of Coase theorem applies. The shadow market area for pollutants is shell-shaped. This specific characteristic has an implication for market boundaries between polluters and their location decisions.
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Date of creation: Aug 2006
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- NEP-ALL-2007-01-14 (All new papers)
- NEP-ENE-2007-01-14 (Energy Economics)
- NEP-ENV-2007-01-14 (Environmental Economics)
- NEP-GEO-2007-01-14 (Economic Geography)
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