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

34 Pages Posted: 9 Nov 2013

See all articles by Matthew E. Kahn

Matthew E. Kahn

University of Southern California; National Bureau of Economic Research (NBER)

Pei Li

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE)

Daxuan Zhao

Renmin University of China - School of Business

Date Written: November 2013

Abstract

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

Kahn, Matthew E. and Li, Pei and Zhao, Daxuan, Pollution Control Effort at China's River Borders: When Does Free Riding Cease? (November 2013). NBER Working Paper No. w19620. Available at SSRN: https://ssrn.com/abstract=2352137

Matthew E. Kahn (Contact Author)

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Pei Li

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE) ( email )

A 307, Economics Building
Xiamen, Fujian 10246
China

Daxuan Zhao

Renmin University of China - School of Business ( email )

Beijing
China

HOME PAGE: http://daxuanzhao.weebly.com/

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