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Shadow Market Area for Air Pollutants

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  • David Meintrup

    ()

  • Chang Woon Nam

    ()

Abstract

This 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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Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa06p412.

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Date of creation: Aug 2006
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Handle: RePEc:wiw:wiwrsa:ersa06p412

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