Non-cooperative Pollution Control in an Inter-jurisdictional Setting

Abstract: This paper examines various circumstances under which decentralized pol-lution policies can be efficient both in federal settings and in multi-region settings with labour mobility. We consider a model in which pollution control policies are set by regional governments non-cooperatively and pollution damages are borne by the residents of all re-gions. We characterize the efficiency of pollution policies, and of population allocation among regions, in a variety of scenarios, including when pollution policies are enacted be-fore interregional transfers are determined by the federal government and before migration occurs; when migration decisions are taken before policy decisions; in the absence of a cen-tral government if regional governments can make voluntary interregional transfers; when decisions over pollution control policies are followed by voluntary contributions by regions to a national public good; when regions can commit to matching the abatement efforts of each other; and when regions can commit to specific levels of abatement contingent on the emissions of other regions not exceeding some maximum level