Estimating the General Equilibrium Benefits of Large Changes in Spatially Delineated Public Goods

31 Pages Posted: 27 Oct 2004

See all articles by Holger Sieg

Holger Sieg

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

V. Kerry Smith

Arizona State University (ASU) - Economics Department; National Bureau of Economic Research (NBER)

H. Spencer Banzhaf

Georgia State University - Department of Economics; PERC - Property and Environment Research Center; National Bureau of Economic Research (NBER)

Randall P. Walsh

University of Colorado at Boulder - Department of Economics

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.

Suggested Citation

Sieg, Holger and Smith, V. Kerry and Banzhaf, H. Spencer and Walsh, Randall P., Estimating the General Equilibrium Benefits of Large Changes in Spatially Delineated Public Goods. International Economic Review Vol. 45, No. 4, pp. 1047-1077, November 2004. Available at SSRN: https://ssrn.com/abstract=608479

Holger Sieg (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
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National Bureau of Economic Research (NBER)

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V. Kerry Smith

Arizona State University (ASU) - Economics Department ( email )

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National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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H. Spencer Banzhaf

Georgia State University - Department of Economics ( email )

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PERC - Property and Environment Research Center

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National Bureau of Economic Research (NBER) ( email )

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Randall P. Walsh

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

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Boulder, CO 80309-0256
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303-492-8622 (Fax)

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