Local solutions to global problems
Subtitle: policy choice and regulatory jurisdiction
By: James Bushnell, Carla Peterman, Catherine Wolfram.
Contributors: Peterman, Carla.; Wolfram, Catherine D.; National Bureau of Economic Research.
Series: NBER working paper series -- no. 13472.; Working paper series (National Bureau of Economic Research) -- working paper no. 13472.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 36
Subjects: Pollution -- Law and legislation -- Econometric models; Environmental law -- Econometric models
Description: This paper considers the efficiency of various types of environmental regulations when they are applied locally to pollutants whose damages extend outside the jurisdiction of the local regulator. We draw on examples from state- and city-level efforts to address climate change by enacting policies to reduce greenhouse gases. While previous work has noted the possibility for leakage, whereby the polluting sources move outside the jurisdiction of the regulation in order to escape it, we note an additional problem when policies are targeted downstream at consumers of goods whose production creates pollution. Specifically, we show how consumer-based policies can be circumvented by a simple reshuffling of who is buying from whom. We argue that the leakage and reshuffling problems are most pronounced with more flexible or market-based regulations. We conclude that localities may have the most effect on global pollutants when they enact efficiency standards or targeted subsidies.
Notes: "October 2007"

Includes bibliographical references (p. 31-32).

Also available in PDF from the NBER world wide web site (www.nber.org).