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Article: Improving the environment with an initial government subsidy

TitleImproving the environment with an initial government subsidy
Authors
KeywordsBalcony
Environmental effect
Hedonic price model
Subsidy
Issue Date2005
PublisherPergamon. The Journal's web site is located at http://www.elsevier.com/locate/habitatint
Citation
Habitat International, 2005, v. 29 n. 3, p. 559-569 How to Cite?
AbstractThis paper attempts to study the approach of using government subsidies to mitigate negative externality, and aims to provide a system for the government to monitor the level of pollution and determine the optimal level of subsidy the level of pollution changes over time. First, literature on the effects of environmental changes is critically reviewed. It is found that the value of pollution mitigation measures was seldom investigated. The Pigovian and Coasian approaches in dealing with the externalities are investigated by a case of the provision of a balcony as a subsidy (negative tax) to the developers for mitigating air and noise pollution in Hong Kong. The results show that the "green" effects provided by a balcony are reflected in property prices. The value of a balcony reflects the privatized cost of pollution to the tenants. Given that transaction costs of negotiation and contracting between polluters and tenants are prohibitively high (irrespective of whether rights of pollution are assigned to either party), the market cannot resolve the problems of the external effects of pollution. This however, does not necessarily call for government intervention, as the information cost for the government to make the optimal decision is also very high. However, we believe that the government subsidy can be used to mitigate negative externalities by making indirect use of market information in Hong Kong. This is possible because the value of mitigating the housing market in Hong Kong is active enough for the estimation of the effects of pollution using a hedonic price model. We proposed an iterative process to solve the government's problem of determining the optimal level of subsidy. A higher than optimal initial subsidy is necessary to 'bootstrap' the iteration process. © 2004 Elsevier Ltd. All rights reserved.
Persistent Identifierhttp://hdl.handle.net/10722/81793
ISSN
2015 Impact Factor: 2.029
2015 SCImago Journal Rankings: 1.038
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorChau, KWen_HK
dc.contributor.authorWong, SKen_HK
dc.contributor.authorYiu, CYen_HK
dc.date.accessioned2010-09-06T08:22:03Z-
dc.date.available2010-09-06T08:22:03Z-
dc.date.issued2005en_HK
dc.identifier.citationHabitat International, 2005, v. 29 n. 3, p. 559-569en_HK
dc.identifier.issn0197-3975en_HK
dc.identifier.urihttp://hdl.handle.net/10722/81793-
dc.description.abstractThis paper attempts to study the approach of using government subsidies to mitigate negative externality, and aims to provide a system for the government to monitor the level of pollution and determine the optimal level of subsidy the level of pollution changes over time. First, literature on the effects of environmental changes is critically reviewed. It is found that the value of pollution mitigation measures was seldom investigated. The Pigovian and Coasian approaches in dealing with the externalities are investigated by a case of the provision of a balcony as a subsidy (negative tax) to the developers for mitigating air and noise pollution in Hong Kong. The results show that the "green" effects provided by a balcony are reflected in property prices. The value of a balcony reflects the privatized cost of pollution to the tenants. Given that transaction costs of negotiation and contracting between polluters and tenants are prohibitively high (irrespective of whether rights of pollution are assigned to either party), the market cannot resolve the problems of the external effects of pollution. This however, does not necessarily call for government intervention, as the information cost for the government to make the optimal decision is also very high. However, we believe that the government subsidy can be used to mitigate negative externalities by making indirect use of market information in Hong Kong. This is possible because the value of mitigating the housing market in Hong Kong is active enough for the estimation of the effects of pollution using a hedonic price model. We proposed an iterative process to solve the government's problem of determining the optimal level of subsidy. A higher than optimal initial subsidy is necessary to 'bootstrap' the iteration process. © 2004 Elsevier Ltd. All rights reserved.en_HK
dc.languageengen_HK
dc.publisherPergamon. The Journal's web site is located at http://www.elsevier.com/locate/habitatinten_HK
dc.relation.ispartofHabitat Internationalen_HK
dc.subjectBalconyen_HK
dc.subjectEnvironmental effecten_HK
dc.subjectHedonic price modelen_HK
dc.subjectSubsidyen_HK
dc.titleImproving the environment with an initial government subsidyen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0197-3975&volume=29&issue=3&spage=559&epage=569&date=2005&atitle=Improving+the+environment+with+an+initial+government+subsidyen_HK
dc.identifier.emailChau, KW: hrrbckw@hku.hken_HK
dc.identifier.emailWong, SK: kelvin.wong@hku.hken_HK
dc.identifier.emailYiu, CY: ecyyiu@hkucc.hku.hken_HK
dc.identifier.authorityChau, KW=rp00993en_HK
dc.identifier.authorityWong, SK=rp01028en_HK
dc.identifier.authorityYiu, CY=rp01035en_HK
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1016/j.habitatint.2004.04.009en_HK
dc.identifier.scopuseid_2-s2.0-12744275020en_HK
dc.identifier.hkuros100518en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-12744275020&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume29en_HK
dc.identifier.issue3en_HK
dc.identifier.spage559en_HK
dc.identifier.epage569en_HK
dc.identifier.isiWOS:000230259300011-
dc.publisher.placeUnited Kingdomen_HK
dc.identifier.scopusauthoridChau, KW=24830082500en_HK
dc.identifier.scopusauthoridWong, SK=7404591021en_HK
dc.identifier.scopusauthoridYiu, CY=9248825800en_HK

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