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Paying for Pollution? How General Equilibrium Effects Undermine the “Spare the Air” Program

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  • Steven Sexton

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Abstract

Policy-makers have relied on non-coercive mechanisms to achieve socially preferred outcomes in a variety of contexts when prices fail to ration scarce resources. Amid heightened concern about environmental damage and climate change, public appeals for cooperation and pecuniary incentives are frequently used to achieve resource conservation and other prosocial behavior. Yet the relative effectiveness of these two instruments is poorly understood when pecuniary incentives are small. This paper examines the extent to which free transit fares and appeals for car trip avoidance reduce car pollution on smoggy days. Using data on freeway traffic volumes and transit ridership, public appeals for cooperation are shown to have no significant effect on car trip demand. Free transit fares, however, do have a significant effect on car trip demand. But the effect is perverse in that it generates an increase in car trips and related pollution. Free fares also increase transit ridership. These results suggest that free transit rides do not induce motorists to substitute to transit, but instead subsidize regular transit rides and additional trips. Appeals for cooperation have no affect on carpooling behavior. Copyright Springer Science+Business Media B.V. 2012

Suggested Citation

  • Steven Sexton, 2012. "Paying for Pollution? How General Equilibrium Effects Undermine the “Spare the Air” Program," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(4), pages 553-575, December.
  • Handle: RePEc:kap:enreec:v:53:y:2012:i:4:p:553-575
    DOI: 10.1007/s10640-012-9577-z
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    Cited by:

    1. Hamilton, Timothy L. & Wichman, Casey J., 2018. "Bicycle infrastructure and traffic congestion: Evidence from DC's Capital Bikeshare," Journal of Environmental Economics and Management, Elsevier, vol. 87(C), pages 72-93.
    2. Beaudoin, Justin & Lin Lawell, C.-Y. Cynthia, 2018. "The effects of public transit supply on the demand for automobile travel," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 447-467.

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