ESTIMATING THE GENERAL EQUILIBRIUM BENEFITS OF LARGE CHANGES IN SPATIALLY DELINEATED PUBLIC GOODS

Authors

  • Holger Sieg,

    1. Carnegie Mellon University and NBER; North Carolina State University and Resources for the Future; Resources for the Future; University of Colorado, USA
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  • V. Kerry Smith,

    1. Carnegie Mellon University and NBER; North Carolina State University and Resources for the Future; Resources for the Future; University of Colorado, USA
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  • H. Spencer Banzhaf,

    1. Carnegie Mellon University and NBER; North Carolina State University and Resources for the Future; Resources for the Future; University of Colorado, USA
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  • Randy Walsh

    1. Carnegie Mellon University and NBER; North Carolina State University and Resources for the Future; Resources for the Future; University of Colorado, USA
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Abstract

The purpose of this article is to report a new approach for measuring the general equilibrium willingness to pay for large changes in spatially delineated public goods such as air quality. We estimate the parameters of a locational equilibrium model and compute equilibria for alternative scenarios characterizing the availability of public goods within a system of communities. Welfare measures take into consideration the adjustments of households in equilibrium to nonmarginal changes in public goods. The framework is used to analyze willingness to pay for reductions in ozone concentrations in Southern California between 1990 and 1995.

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