ECON 2J03 Lecture Notes - Lecture 8: Air Purifier, Contingent Valuation, Demand Curve
Document Summary
Preventive or mitigating expenditures, hedonic estimation, surrogate markets, contingent valuation. Preventive or mitigating expenditures: people often make preventive or mitigating expenditures in order to reduce the damage caused by pollution, we can use these expenditures to estimate peoples willingness to pay to avoid pollution. Example: smog: urban smog is a problem faced by many cities, certain cities are more prone to smog that others, a mitigating or defensive expenditure might be to purchase an air purifier. Problems with mitigating expenditure: this approach cannot be used for all environmental problems because we may be unable to measure mitigating expenditures linked to the specific environmental problem. It may be difficult to determine whether the expenditure is connected to a specific environmental problem. The differences in demand curves across cities might reflect some other characteristic instead of air pollution.
