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The Price of Silence: Markets for Noise Licenses and Airports

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  • Thierry Brechet
  • Pierre M. Picard

    (CREA, University of Luxembourg)

Abstract

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.

Suggested Citation

  • Thierry Brechet & Pierre M. Picard, 2008. "The Price of Silence: Markets for Noise Licenses and Airports," DEM Discussion Paper Series 08-08, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:08-08
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    References listed on IDEAS

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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. Jan K. Brueckner, 2003. "Airline Traffic and Urban Economic Development," Urban Studies, Urban Studies Journal Limited, vol. 40(8), pages 1455-1469, July.
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    Cited by:

    1. Hong, Jimin & Seog, S. Hun, 2018. "Life insurance settlement and the monopolistic insurance market," Insurance: Mathematics and Economics, Elsevier, vol. 81(C), pages 36-50.
    2. Thierry Bréchet & Pierre M. Picard, 2010. "The Economics of Airport Noise: Managing Markets for Noise Licenses," DEM Discussion Paper Series 10-13, Department of Economics at the University of Luxembourg.
    3. Akyol, Metin & Neugart, Michael & Pichler, Stefan, 2015. "A tradable employment quota," Labour Economics, Elsevier, vol. 36(C), pages 48-63.
    4. BRECHET, Thierry & PICARD, Pierre M., 2010. "The economics of airport noise: how to manage markets for noise licenses," LIDAM Discussion Papers CORE 2010086, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Picard, Pierre M. & Selod, Harris, 2023. "Customary Land Conversion in African Cities," IZA Discussion Papers 16462, Institute of Labor Economics (IZA).

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