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A Model of Competing Jurisdictions with Locally Polluting Environments and Mobile Populations

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  • Vincent Hildebrand

    ()

  • Charles Plourde

    ()

Abstract

In this model we consider a federation consisting oftwo geographically separated Regional states withlocal taxing authority. The residents of thefederation are identical in preferences and haveexplicit tolerance to pollution. Pollution is local innature and is a by-product of production implying amore highly populated region would generate morepollution. Local authorities in the regions can andwill (in the interest of local residents) engage ingame theoretical taxation strategies. The model isused to illustrate that Nash Equilibrium can resultwherein the two regions have different levels ofenvironmental quality. The resulting Nash conditionsimply for instance that residents of the ``cleanregion'' will subsidize those in the other region tostay in the more polluted environment (in order foreach to accomplish their preferred consumption andenvironmental quality pair). Copyright Kluwer Academic Publishers 2001

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File URL: http://hdl.handle.net/10.1023/A:1011115932370
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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 18 (2001)
Issue (Month): 2 (February)
Pages: 219-231

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Handle: RePEc:kap:enreec:v:18:y:2001:i:2:p:219-231

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Web page: http://www.springerlink.com/link.asp?id=100263

Related research

Keywords: efficiency; environment; federation; interregional transfers; pollution;

References

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  1. Mansoorian, Arman & Myers, Gordon M., 1993. "Attachment to home and efficient purchases of population in a fiscal externality economy," Journal of Public Economics, Elsevier, vol. 52(1), pages 117-132, August.
  2. David E. Wildasin, 2005. "Fiscal Competition," Working Papers 2005-05, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
  3. Bucovetsky, Sam & Wilson, John Douglas, 1991. "Tax competition with two tax instruments," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 333-350, November.
  4. Flatters, Frank & Henderson, Vernon & Mieszkowski, Peter, 1974. "Public goods, efficiency, and regional fiscal equalization," Journal of Public Economics, Elsevier, vol. 3(2), pages 99-112, May.
  5. Myers, Gordon M., 1990. "Optimality, free mobility, and the regional authority in a federation," Journal of Public Economics, Elsevier, vol. 43(1), pages 107-121, October.
  6. Oates, Wallace E. & Schwab, Robert M., 1988. "Economic competition among jurisdictions: efficiency enhancing or distortion inducing?," Journal of Public Economics, Elsevier, vol. 35(3), pages 333-354, April.
  7. Myers, G.M. & Mansoorian, A., 1995. "Private Sector Versus Public Sector Externalities," Papers 95-1, York (Canada) - Department of Economics.
  8. Wellisch, Dietmar, 1994. "Interregional spillovers in the presence of perfect and imperfect household mobility," Journal of Public Economics, Elsevier, vol. 55(2), pages 167-184, October.
  9. Dietmar Wellisch, 1995. "Can household mobility solve basic environmental problems?," International Tax and Public Finance, Springer, vol. 2(2), pages 245-260, August.
  10. Zagonari, Fabio, 1998. "International Pollution Problems: Unilateral Initiatives by Environmental Groups in One Country," Journal of Environmental Economics and Management, Elsevier, vol. 36(1), pages 46-69, July.
  11. Boadway, Robin, 1982. "On the Method of Taxation and the Provision of Local Public Goods: Comment," American Economic Review, American Economic Association, vol. 72(4), pages 846-51, September.
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Cited by:
  1. van 't Veld, Klaas & Shogren, Jason F., 2012. "Environmental federalism and environmental liability," Journal of Environmental Economics and Management, Elsevier, vol. 63(1), pages 105-119.

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