Citrus greening is a bacterial disease with no cure or treatment. Since its onset in Florida, orange production statewide has decreased by more than 90%. A recently approved technology consists of injecting antibiotics into tree trunks, which growers expect to improve tree health and increase yield. We use a spatial equilibrium model to conduct an ex-ante analysis of the not-from-concentrate orange juice market to examine the market and welfare impacts of Florida growers’ adoption of antibiotic trunk injections. Results show yield must increase by at least 83% to generate a positive producer surplus when using a discount rate of 10%.

We develop a health demand model informed by Grossman's theoretical framework, examining how air pollution governance (APG) affects health and income inequality. Analysis of the China Health and Nutrition Survey data reveals that APG has markedly enhanced the health status of local residents, consequently mitigating regional income inequality. For every doubling of air pollution control, the likelihood of residents falling ill diminishes by 40.3 per cent; in contrast to regions with inadequate APG, the income inequality coefficient in regions with robust APG declines by approximately 6.2 per cent. An in-depth examination of the welfare implications of APG, both theoretically and empirically, reveals that such governance enhances the ‘production possibility frontier’ for the population, thereby augmenting individual utility.

We develop a model to perform a cost–benefit analysis of bus fare subsidies under financial constraints that preclude the purchase of additional buses. Our model considers users’ costs in the provision of bus services and the lack of road pricing to internalize urban transport externalities in a context where financial constraints severely limit the institutional ability to plan and design the bus system. Because of financial constraints, the bus system can hardly accommodate demand during peak times: buses travel overcrowded, passengers cannot board the first bus to arrive at the bus stop, and they cannot arrive at their destination at their desired time. Another salient aspect of our model is the inclusion of motorcycles as a second private transport mode. Motorcycles are typical in many urban agglomerations in the emerging world and engender many negative transport externalities. According to our results, fare subsidies provide social benefits in Metropolitan Asunción. During peak hours, a higher subsidy is justified as the reduction of the unpriced external costs of substitute modes compensates for the increased cost created by an additional bus passenger. In the off-peak, a higher subsidy is justified (i) as the higher frequencies induced by the new bus ridership reduce waiting times and (ii) because of the reduction of the unpriced external costs of substitute modes. Although our model does not explicitly include inequality aversion, we discuss the distributional aspects of subsidies in the context of middle-income countries.

We develop a general equilibrium overlapping generations framework with incompletely rational individuals to study old-age saving incentives. Such incentives are used worldwide to help achieve the high savings rate required to sustain sufficient consumption in old age. We show that they raise the welfare of financially illiterate individuals and those with a high degree of time inconsistency. They also reduce the incidence of poverty in old age. We further quantify the fiscal cost, crowd-out, and ability to target the transfers to individuals who need the most. Given the high prevalence of these schemes, our paper has broad policy implications.

Traditionally, information has been assumed to never harm consumers, a notion recently challenged. Salience nudges have been argued to evoke negative emotions, therefore acting as “emotional taxes”. I design a hypothetical restaurant meal experiment to analyze the emotional and short-term consumer welfare impact of a calorie salience nudge (calorie menu labeling) – a policy implemented nationwide in the U.S. in 2018. I find that a calorie salience nudge may act as an emotional tax, but only for some – there is considerable heterogeneity in the emotional response to the nudge. In particular, the nudge emotionally taxes people with low eating self-control, while it emotionally subsidizes those with higher levels of eating self-control. It therefore emotionally taxes the “right” people. However, people with lower levels of self-control may experience fewer benefits from the nudge – the nudge causes them to adjust their high calorie meal consumption by less than do those with higher self-control. It is therefore unsurprising that consumers with lower self-control attach a lower (a negative) value to the calorie salience nudge. Overall, the calorie salience nudge positively affects consumer welfare, although heterogeneity over consumers is substantial – the consumer value ranges from positive to negative. I find no distributional effects over income from the calorie salience nudge.

Wind-borne diseases can spread rapidly and cause large losses. Producers may have little incentive to prevent disease spread because prevention may not be welfare-maximizing. This study proposes a market-based mitigation program that indemnifies producers against disease-related losses and provides an incentive to neighboring producers to take preventive action, which can substantially mitigate infestations, reduce the likelihood of catastrophic losses, and increase social welfare. An equilibrium displacement model simulates introduction of the program for U.S. soybeans. Simulations reveal that the market-based solution contributes to minor market distortions but also reduces social welfare losses and could succeed for other at-risk commodities.

In constitutional democracies, laws take time to be deliberated upon, to be passed, and to be implemented. Motivated by this observation, we study the properties of optimal tax reform when it has to be announced in advance of its implementation. We find that a delay between announcement and implementation has large effects on the optimal fiscal policy during the transition to the new steady state. On the other hand, we find that the welfare gains from optimal tax reform are fairly robust to the introduction of an implementation lag. Increasing the lag from zero to four years reduces the welfare gains by less than a quarter. Moreover, it turns out that this reduction of the welfare gain is mainly due to the delay itself rather than the effect of preannouncement on the character of the optimal tax reform.