Spatial aspects of pollution control when pollutants have synergistic effects: Evidence from a differential game with asymmetric information

Abstract.

An asymmetric information differential game is utilized to explore the normative issue: should environmental regulations be carried out locally or centrally? Modeling localities as having superior information, or more leniency to adopt new environmental regulations, results from simulations indicate that local control Pareto dominates central control when enough synergism occurs between pollutants. In contrast to predictions made by those responsible for framing US environmental policy in the 1960s, these findings suggest an expanded future role for local governments in providing environmental protection, particularly in light of Tiebout's (1956) analysis of consumers who “vote with their feet” for their preferred basket of public services. “Practically all the things we've done in the federal government are like things Al Smith did as governor in New York.”–Franklin Roosevelt (Schlesinger, 1960, p. 520)