PT  - JOURNAL ARTICLE
AU  - He, Jie
AU  - He, Yue
AU  - Zhang, Bing
TI  - Income Elasticity of Willingness to Pay for Better Air Quality
AID  - 10.3368/le.100.3.022822-0018R2
DP  - 2024 Jan 22
TA  - Land Economics
PG  - 022822-0018R2
4099  - http://le.uwpress.org/content/early/2024/01/18/le.100.3.022822-0018R2.short
4100  - http://le.uwpress.org/content/early/2024/01/18/le.100.3.022822-0018R2.full
AB  - We use a nested CES utility function to introduce a private environmental substitute in a theoretical model. We found that buyer’s income elasticity of WTP increases with price of the substitute and decreases with income. Meanwhile, a higher price and a lower income also discourage purchase of the substitute, reducing the proportion of buyers in population. We therefore need to consider both dimensions while discussing societal mean WTP. An empirical check based on a contingent valuation survey confirms our theoretical findings. The projected income-WTP curves reveal inequality reduces the mean WTP more in the presence of private environmental substitutes.