NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Matthew E. Kahn, Pei Li, Daxuan Zhao

NBER Working Paper No. 19620
Issued in November 2013
NBER Program(s):   EEE   PE   POL

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.

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Document Object Identifier (DOI): 10.3386/w19620

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