Seventy percent of the world's urban population breathes unsafe air. From 300,000 to 700,000 people die each year as a result, many in developing countries. Expenditures to improve air quality compete with demands for other social needs, such as housing, education, medical care, nutrition, sanitation, and safe drinking water. Programs to provide these needs are viewed as producing goods while air quality policies are seen as ameliorating a bad. However, it is more appropriate to think about air quality as another good that must be produced as a joint product of other processes. From this perspective, policies to improve air quality have a broader scope than do either traditional regulations and standards or incentive based programs. This paper places air quality policy choices in the context of healthier air as a product, explicitly recognizing its public good characteristics and the lack of close private substitutes. Copyright 1995 Western Economic Association International.
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