Keywords: acid rain, spatial equilibrium, coal market, sulphur pollution, United States, USA, environmental regulations, environmental impact, coal allocation, sulphur oxides emissions, environmental pollution
Impact of environmental regulations on the optimal allocation of coal among regions in the United States
This study investigates the environmental impact of acid rain controls on the optimal allocation of coal among regions in the United States using a quadratic programming approach. A per-unit tax, which is equal to the marginal damage cost of sulfur oxides emissions, is used as the regulatory means of controlling sulfur pollution. The government can therefore make utilities decrease sulfur emissions and reduce the damage they cause to socially efficient level. In the process, the Midwest (region three) would lose substantial amounts of high sulfur coal production, whereas the low-sulfur coal region of Central Appalachia (region one) would benefit as a result of regulation.