Introduction

Economic theory provides a simple but powerful insight into efficient pollution control:it saves money to minimize the sum of abatement costs and pollution damages. Applied economists, rarely able to estimate pollution damages, have not been in a position to realize even this basic insight. A computer based environmental model is used in order to simulate the consequences of air pollution control measures upon society. These simulations illustrate the connection between abatement methods and their final environmental consequences. Economic theorists have long been concerned about pollution partially because of its noticeable impact on human welfare, but primarily because emissions are not regulated by the “invisible hand” of the market place. The critical argument for government intervention in air pollution control, however, is that there is not one victim but rather a multitude of victims. The chapter also presents an overview of the key concepts discussed in this book.