Using Spatial Econometrics to Measure Ozone Pollution Externalities

Abstract

This paper summarizes my previous work in Lin (2010), in which I use spatial econometrics to analyze air pollution externalities. In Lin (2010), state-by-state source-receptor transfer coefficients that can be used as a basis for a location- differentiated permit system are estimated. Results affirm the importance of regional transport in determining local ozone air quality, although owing to non-monotonicities in ozone production the externality is not always negative. Because the origin of emissions matters, results also reject a non-spatially differentiated NOx cap and trade program as an appropriate mechanism for reducing ozone smog.