TY  - JOUR
AU  - Bushnell,James
AU  - Peterman,Carla
AU  - Wolfram,Catherine
TI  - Local Solutions to Global Problems: Policy Choice and Regulatory Jurisdiction
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13472
PY  - 2007
Y2  - October 2007
UR  - http://www.nber.org/papers/w13472
L1  - http://www.nber.org/papers/w13472.pdf
N1  - Author contact info:
James B. Bushnell
Department of Economics
One Shields Ave.
University of California, Davis
Davis, CA 95168
Tel: 530/752-3129
E-Mail: jbbushnell@ucdavis.edu

Carla Peterman
UC, Berkeley
2547 Channing Way
Berkeley, CA 94720
E-Mail: cpeterman@berkeley.edu

Catherine Wolfram
Haas School of Business
University of California, Berkeley
Berkeley, CA  94720-1900
Tel: 510/642-2588
Fax: 510/643-1420
E-Mail: wolfram@haas.berkeley.edu
AB  - 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.
ER  -