Can decentralized planning really achieve first-best in the presence of environmental spillovers?

Fell, Harrison; Kaffine, Daniel T.

doi:10.1016/j.jeem.2014.04.001

Cited by 47 publications

(44 citation statements)

References 13 publications

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“…This effect is considered in Oates and Schwab (1988), although they do not consider transboundary pollution. 16 Following Fell and Kaffine (2014), I assume that the tax revenue is paid back to residents. (4) and (5) also show the effect of policy variables on the net return to capital.…”

Section: The Modelmentioning

confidence: 99%

“…There are several works that give qualifications to the efficiency result of Ogawa and Wildasin (2009). Fell and Kaffine (2014) show that the efficiency result of Ogawa and Wildasin (2009) may not hold if capital retirement or public abatement activity is incorporated so that the total amount of pollution is endogenous. Fell and Kaffine (2014) show that the efficiency result of Ogawa and Wildasin (2009) may not hold if capital retirement or public abatement activity is incorporated so that the total amount of pollution is endogenous.…”

Section: Introductionmentioning

confidence: 99%

“…This is presumably because Fell and Kaffine's (2014) main focus is endogenizing the total pollution and abatement activities are introduced as a simple way for achieving that purpose. Thus, each jurisdiction's environmental policymaking is linked not only by transboundary pollution but also by the capital market, which makes the underlying mechanism quite different from that of Fell and Kaffine (2014). Thus, each jurisdiction's environmental policymaking is linked not only by transboundary pollution but also by the capital market, which makes the underlying mechanism quite different from that of Fell and Kaffine (2014).…”

Section: Introductionmentioning

confidence: 99%

“…In contrast, as in Oates and Schwab (1988), my model introduces environmental regulation so that it can be used in attracting capital. Moreover, heterogeneity in capital endowment and the possibility that environmental policymaking may affect choices on tax rates are not considered in Fell and Kaffine (2014). 9 This structure allows me to investigate whether intergovernmental competition for capital has the surprising ability to internalize transboundary pollution even when jurisdictions compete not only in taxes but also in regulation levels.…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Transboundary Pollution, Tax Competition, and the Efficiency of Uncoordinated Environmental Regulation

Yamagishi

2016

SSRN Journal

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Section: The Modelmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Transboundary Pollution, Tax Competition, and the Efficiency of Uncoordinated Environmental Regulation

Yamagishi

2016

SSRN Journal

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“…Destructive regulatory competition, known as the "race to the bottom", indicates that decentralization may lower environmental quality. Fell and Kaffine [14] proved that the pollution levels of decentralization generally differ from that of a centralized planner's social welfare-maximizing problem if we permit capital retirement and abatement activities. Related empirical research has found strong evidence that the decentralization of environmental governance leads to more serious boundary pollution around the world.…”

Section: Introductionmentioning

confidence: 99%

The Water Pollution Policy Regime Shift and Boundary Pollution: Evidence from the Change of Water Pollution Levels in China

Shen

Yang

2017

Sustainability

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Boundary environmental pollution and pollution spillovers are important issues for improving the water quality of trans-boundary rivers. This paper explores the empirical effects of the evolution of the pollution reduction mandates on boundary pollution by studying the change of water pollution levels (as proxied by pH, BOD, COD and NH3-N) of key state monitoring stations from 2004 to 2014. The empirical findings support the existence of boundary pollution and indicate the association between environmental policy and boundary pollution levels using propensity score matching, although the relation is conditional on which water pollution measure is considered. The pollution levels of monitoring stations on provincial borders are significantly higher than those of interior monitoring stations. The pollution of tributaries is more serious than that of the main stream, which was quickly reversed after the pollution reduction mandates changed. The improvement of the water environment showed great differences with the change of policy when we compare the water quality of monitoring stations in the upper reaches of provincial borders with the water quality downstream of provincial borders. Our empirical analysis finds strong evidence of strategic polluting across provincial borders. Local officials may manipulate pollution within their jurisdictions, and the overall pollution reduction target will exacerbate border pollution, whereas water quality inspection can reduce marginal pollution. Finally, we further validate the net impact of the policies on boundary pollution using a difference in difference (DID) approach.

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The effect of environmental centralisation on productivity: Evidence from an administrative reform in China

Li,

Yang

2023

J of Intl Development

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This paper adopts a novel institutional perspective—environmental centralisation—to examine its impact on firm productivity in developing countries. In 2008, China's State Environmental Protection Administration was upgraded to the Ministry of Environmental Protection (MEP). This administrative reform strengthened the central government's ability to protect the environment, enabling it to address more environmental affairs and concentrate on environmental rights. Based on the quasi‐natural experiment of the establishment of the MEP, this study takes a new perspective on the impact of environmental centralisation on productivity. The difference‐in‐difference‐in‐difference approach is used for the first time to estimate the impact of environmental centralisation on productivity. We find that environmental centralisation caused by the establishment of the MEP significantly increased the productivity of heavily polluting companies, and a series of robustness tests confirm that the results are credible. We identify three possible mechanisms, namely, facilitating innovation, curbing rent‐seeking behaviour and inhibiting over‐investments. The policy implication of this study is that the effectiveness of environmental policy depends not only on the policy itself but also on the allocation of environmental rights among different levels of government.

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Can decentralized planning really achieve first-best in the presence of environmental spillovers?

Cited by 47 publications

References 13 publications

Transboundary Pollution, Tax Competition, and the Efficiency of Uncoordinated Environmental Regulation

Transboundary Pollution, Tax Competition, and the Efficiency of Uncoordinated Environmental Regulation

The Water Pollution Policy Regime Shift and Boundary Pollution: Evidence from the Change of Water Pollution Levels in China

The effect of environmental centralisation on productivity: Evidence from an administrative reform in China

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