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Fundamental Flaws of Social Regulation: The Case of Airplane Noise

  • Morrison, Steven A
  • Winston, Clifford
  • Watson, Tara

This article provides an economic assessment of federal regulatory policy toward airplane noise as encapsulated in the 1990 Airport Noise and Capacity Act (ANCA). This act mandated the elimination of certain aircraft, such as the Boeing 727 and DC-9, from all U.S. airports by the end of 1999 to meet quieter noise requirements. We find that the present discounted benefits of the ANCA, reflected in higher property values for homeowners, fall $5 billion short of the ANCA's cost to airlines, reflected in the reduced economic life of their capital stock. More fundamentally, we find that the net benefits that could have been generated by an economically optimal airplane noise tax amount to only $0.2 billion (present value). It appears that noise regulations have generated substantial costs to society when, in fact, there was little justification on efficiency grounds for regulatory intervention in the first place. Copyright 1999 by the University of Chicago.

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File URL: http://dx.doi.org/10.1086/467440
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Article provided by University of Chicago Press in its journal Journal of Law & Economics.

Volume (Year): 42 (1999)
Issue (Month): 2 (October)
Pages: 723-43

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Handle: RePEc:ucp:jlawec:v:42:y:1999:i:2:p:723-43
Contact details of provider: Web page: http://www.journals.uchicago.edu/JLE/

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  1. Martin L. Weitzman, 1974. "Prices vs. Quantities," Review of Economic Studies, Oxford University Press, vol. 41(4), pages 477-491.
  2. Small, Kenneth A, 1975. "Air Pollution and Property Values: Further Comment," The Review of Economics and Statistics, MIT Press, vol. 57(1), pages 105-07, February.
  3. Calfee, John & Winston, Clifford, 1998. "The value of automobile travel time: implications for congestion policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 83-102, July.
  4. O'Byrne, Patricia Habuda & Nelson, Jon P. & Seneca, Joseph J., 1985. "Housing values, census estimates, disequilibrium, and the environmental cost of airport noise: A case study of Atlanta," Journal of Environmental Economics and Management, Elsevier, vol. 12(2), pages 169-178, June.
  5. Schipper, Youdi & Nijkamp, Peter & Rietveld, Piet, 1998. "Why do aircraft noise value estimates differ? A meta-analysis," Journal of Air Transport Management, Elsevier, vol. 4(2), pages 117-124.
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