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The Price of Silence: Markets for Noise Licenses and Airports

  • Thierry Brechet
  • Pierre M. Picard

    ()

    (CREA, University of Luxembourg)

This paper presents a market design for the management of noise pol- lution created by aircraft tra¢ c around airports. A local market for noise licenses allows noise generators to compensate noise victims. We show that the market allows the market designer to achieve his/her optimal allocation of flights provided that he/she does not over-weight the benefit of economic activity compared to the disutility of noise pollution. The fact that local rep- resentatives of noise victims may be strategic players does not fundamentally alter this finding. Because of the market auctioneer's information constraints, noise licenses are likely to distribute windfall gains to residents, which alter the urban structure in the long run.

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File URL: http://wwwfr.uni.lu/content/download/16900/214243/file/2008-08_The%20Price%20of%20Silence,%20Markets%20for%20Noise%20Licenses%20and%20Airports.pdf
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Paper provided by Center for Research in Economic Analysis, University of Luxembourg in its series CREA Discussion Paper Series with number 08-08.

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Date of creation: 2008
Date of revision:
Handle: RePEc:luc:wpaper:08-08
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  1. Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
  2. A. Ellerman, 2005. "A Note on Tradeable Permits," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 31(2), pages 123-131, 06.
  3. Juan-Pablo Montero, 2008. "A Simple Auction Mechanism for the Optimal Allocation of the Commons," American Economic Review, American Economic Association, vol. 98(1), pages 496-518, March.
  4. Schipper, Youdi, 2004. "Environmental costs in European aviation," Transport Policy, Elsevier, vol. 11(2), pages 141-154, April.
  5. Jon P. Nelson, 2004. "Meta-Analysis of Airport Noise and Hedonic Property Values," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 38(1), pages 1-27, January.
  6. Morrison, Steven A & Winston, Clifford & Watson, Tara, 1999. "Fundamental Flaws of Social Regulation: The Case of Airplane Noise," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 723-43, October.
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