This chapter discusses the relationship between economics and air pollution: first, it presents the main characteristics of the economic growth-environmental pressure debate and introduces the concept of environmental Kuznets curve hypothesis (EKC). As an example of the EKC, the estimated relationship between CO2 emissions and economic growth, using a cross-sectional sample of 152 countries, is reported. Second, the chapter discusses air pollution as a result of a market failure and introduces the main theoretical causes of ambient degradation, acknowledging air pollution externalities as a common problem that leads to overexploitation in the absence of well-defined property rights for the atmosphere. Third, the main instruments for pollution control, including traditional regulation based on standards and the more flexible incentive-based regulation, are presented. Finally, the chapter reviews the main features of cost and benefits related to air pollution emissions.
Part of the book: Air Quality