An Econometric Evaluation of Sulfur Taxes

In contrast to the standard comparative static analysis of alternative policy instruments for dealing with air pollution, the present study provides a dynamic framework of analysis through the use of an econometric model. An econometric model of the electric utility industry is utilized to calculate the welfare gains associated with the imposition of a sulfur tax as enumerated in the Pure Air Tax Act of 1972. The dynamic properties of a recent proposal by Baumol and Oates which would combine an ambient air standard and a charges policy are also examined.