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Pollution Control Effort at China's River Borders: When Does Free Riding Cease?


  • Matthew E. Kahn
  • Pei Li
  • Daxuan Zhao


At political boundaries, local leaders often have weak incentives to reduce polluting activity because the social costs are borne by downstream neighbors. This paper exploits a natural experiment set in China in which the central government changed the local political promotion criteria and hence incentivized local officials to reduce border pollution along specific criteria. Using a difference in difference approach, we document evidence of pollution progress with respect to targeted criteria at river boundaries. Other indicators of water quality, not targeted by the central government, do not improve after the regime shift. Using data on the economic geography of key industrial water polluters, we explore possible mechanisms.

Suggested Citation

  • Matthew E. Kahn & Pei Li & Daxuan Zhao, 2013. "Pollution Control Effort at China's River Borders: When Does Free Riding Cease?," NBER Working Papers 19620, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19620
    Note: EEE PE POL

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    Cited by:

    1. Sheila M. Olmstead & Hilary Sigman, 2015. "Damming the Commons: An Empirical Analysis of International Cooperation and Conflict in Dam Location," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(4), pages 497-526.
    2. Millimet, Daniel L., 2013. "Environmental Federalism: A Survey of the Empirical Literature," IZA Discussion Papers 7831, Institute for the Study of Labor (IZA).

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    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H4 - Public Economics - - Publicly Provided Goods
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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