Transcript Chapter 8
C H A P T E R 8 HEDONIC PRICE METHODS
ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.
FIGURE 8.1
A valley divided into a clean region and a dirty region.
ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.
FIGURE 8.2
Effect of pollution on land rents and wages with productive pollution.
A,
wage/rent at pollution =
p
1 ;
B,
wage/rent at pollution
= p
2 ;
c(w,r,p)
= 1, isocost lines;
V
(
w,r,p
)
= k
, isoutility lines. Note:
p
2 >
p
1 .
ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.
ENVIRONMENTAL ECONOMICS
FIGURE 8.3
Wages, rent, and discretionary income, as a function of pollution levels.
– 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.
FIGURE 8.4
Representative wage-pollution indifference curves for two different individuals (higher utility associated with upward shifts in indifference curves).
ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.
FIGURE 8.5
Consumer choice. θ
(y,z,U),
amount of money available to bid for house with air quality
z
, for a person with income
y,
obtaining utility
U; p(z),
price of house with air quality level
z.
ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.
FIGURE 8.6
Producer choice. φ
A
(
r,z,
π)
,
house offer price when air quality level is
z
, input prices
r,
necessary to give profit π;
p(z),
price of house with air quality level
z
.
ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.
FIGURE 8.7
Equilibrium in an hedonic market. φ i for three consumers,
j
= 1,2,3;
E
k
, ,
offer function for three producers, equilibrium between producer
k
and consumer
i
= 1,2,3; θ
k, k
= 1,2,3; j
,
bid function
p(z),
price of house with air quality level
z
.
ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.
FIGURE 8.8
Marginal willingness to pay for
z. p’(z),
slope of hedonic price line with respect to
z
(marginal value of
z
);
MWTP
i
(z),
marginal willingness to pay for one more unit of
z,
consumers
i
= 1,2.
ENVIRONMENTAL ECONOMICS – 2e Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.
ENVIRONMENTAL ECONOMICS – 2e
FIGURE 8.9
Wage –risk relationship.
Charles D. Kolstad Copyright © 2011 by Oxford University Press, Inc.