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Downwind and Out: The Strategic Dispersion of Power Plants and Their Pollution

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  • John M. Morehouse
  • Edward Rubin

Abstract

In federalist systems, local governments may face incentives to export locally produced negative externalities. We empirically substantiate this externality-export strategy for air pollution using historical power-plant sitings, administrative borders, and prevailing wind directions. Using a simple, nonparametric test, we show that decision-makers disproportionately sited coal-fueled plants to reduce counties’/states’ downwind pollution exposure. Natural-gas-fueled plants—lower polluters—did not follow this strategy. We then illustrate the extreme exportability of coal plants’ pollution: within six hours, 50% of coal plants’ emissions leave their source states—and 99% depart source counties. These results highlight how local strategic responses challenge federalist systems.

Suggested Citation

  • John M. Morehouse & Edward Rubin, 2026. "Downwind and Out: The Strategic Dispersion of Power Plants and Their Pollution," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 13(3), pages 831-867.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/740146
    DOI: 10.1086/740146
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