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Economic Analysis of a Japanese Air Pollution Regulation: An Optimal Retirement Problem under Vehicle Type Regulation in the NOx–Particulate Matter Law

Author

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  • Iwata, Kazuyuki
  • Arimura, Toshi

Abstract

This paper empirically examines the vehicle type regulation that was introduced under the Automobile Nitrogen Oxides–Particulate Matter Law to mitigate air pollution problems in Japanese metropolitan areas. The vehicle type regulation effectively sets various timings of vehicle retirement by the first registration year and by type. However, there was no consideration of cost or efficiency in choosing the timing of retirement. We set and solve an optimal problem to maximize the social net benefit under the current framework of the vehicle type regulation. The analysis finds that the net benefit can increase by about 104 percent if the optimal retirement timing is chosen. Further, we confirm that even a simple alteration of retirement timing can increase the social net benefit by 13 percent. Thus, we confirm the importance of an ex-ante quantitative policy evaluation, a regulatory impact analysis, from the viewpoint of efficiency.

Suggested Citation

  • Iwata, Kazuyuki & Arimura, Toshi, 2008. "Economic Analysis of a Japanese Air Pollution Regulation: An Optimal Retirement Problem under Vehicle Type Regulation in the NOx–Particulate Matter Law," Discussion Papers dp-08-15, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-08-15
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    File URL: http://www.rff.org/RFF/documents/RFF-DP-08-15.pdf
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    References listed on IDEAS

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    1. Lumbreras, J. & Valdés, M. & Borge, R. & Rodriguez, M.E., 2008. "Assessment of vehicle emissions projections in Madrid (Spain) from 2004 to 2012 considering several control strategies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(4), pages 646-658, May.
    2. Anna Alberini & Winston Harrington & Virginia McConnell, 1995. "Determinants of Participation in Accelerated Vehicle-Retirement Programs," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 93-112, Spring.
    3. Viscusi, W Kip & Aldy, Joseph E, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 5-76, August.
    4. Alberini, Anna & Harrington, Winston & McConnell, Virginia, 1996. "Estimating an Emissions Supply Function from Accelerated Vehicle Retirement Programs," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 251-265, May.
    5. repec:reg:rpubli:282 is not listed on IDEAS
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    Citations

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    Cited by:

    1. Yushi Kunugi & Toshi H. Arimura & Kazuyuki Iwata & Eiji Komatsu & Yoshie Hirayama, "undated". "Cost-efficient strategy for reducing particulate matter 2.5 in the Tokyo Metropolitan area:An integrated approach with aerosol and economic models," Working Papers 1709, Waseda University, Faculty of Political Science and Economics.
    2. Kazuyuki Iwata & Toshi H. Arimura & Tetsuya Shimane, "undated". "The effectiveness of vehicle emission control policies: Evidence from Japanese experience," Working Papers e77, Tokyo Center for Economic Research.

    More about this item

    Keywords

    air pollution; regulatory impact analysis; NOx-PM law; cost–benefit analysis; optimal retirement model;

    JEL classification:

    • 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
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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