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

Author

Listed:
  • Koichiro Ito
  • Shuang Zhang

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.

Suggested Citation

  • Koichiro Ito & Shuang Zhang, 2020. "Willingness to Pay for Clean Air: Evidence from Air Purifier Markets in China," Journal of Political Economy, University of Chicago Press, vol. 128(5), pages 1627-1672.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/705554
    DOI: 10.1086/705554
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    JEL classification:

    • L0 - Industrial Organization - - General
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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