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

55 Pages Posted: 27 Jun 2016 Last revised: 12 Feb 2023

See all articles by Koichiro Ito

Koichiro Ito

Stanford University

Shuang Zhang

University of Colorado at Boulder - Department of Economics

Date Written: June 2016

Abstract

We develop a framework to estimate willingness to pay (WTP) for clean air from defensive investment. Applying this framework to product-by-store level scanner data on air purifier sales in China, we provide among the first revealed preference estimates of WTP for clean air in developing countries. A spatial discontinuity in air pollution created by the Huai River heating policy enables us to analyze household responses to long-run exposure to pollution. Our model allows heterogeneity in preference parameters to investigate potential heterogeneity in WTP among households. We show that our estimates provide important policy implications for optimal environmental regulation.

Suggested Citation

Ito, Koichiro and Zhang, Shuang, Willingness to Pay for Clean Air: Evidence from Air Purifier Markets in China (June 2016). NBER Working Paper No. w22367, Available at SSRN: https://ssrn.com/abstract=2800876

Koichiro Ito (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

HOME PAGE: http://www.stanford.edu/~itok

Shuang Zhang

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309
United States

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