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Abstract
Mandatory inspection and maintenance programs require on-road vehicles to be tested regularly
and repaired if they are not in compliance with air emission regulations. The purpose of this
paper is to estimate the abatement cost function for a representative inspection and maintenance
program. We do this by constructing a model of the statistical process that leads to noncompliance,
parameterizing the model, and then by simulating the total abatement cost function.
Our model predicts that the marginal abatement cost for a major representative program is so
high that even a small reduction in the abatement target leads to substantial social cost savings.
In addition, even for quite high levels of the abatement target, the optimal minimum testing age
is substantially higher and the frequency of testing is much lower than is common in many
jurisdictions.