Evaluating the Benefits of Non-marginal Reductions in Pollution using Information on Defensive Expenditures

Recent studies analyze the benefits of environmental improvements when households make defensive expenditures to alleviate pollution's effects (see [2, 7, 9, 15]). This literature focuses on the benefits of pollution reductions that are marginal, i.e., small. This article analyzes the relationship between defensive expenditures and the benefits of pollution reductions that are non-marginal, i.e., large.