The paper highlights that the race-to-top result shown by Wellisch (1995) and Kunce and Shogren (2005a) may be exacerbated by inter-jurisdictional commuting, leading to increased NIMBY behavior (Not-In-My-Back-Yard) among metropolitan jurisdictions. Local governments try to push polluting economic activities to the neighboring jurisdictions, while commuting guarantees their residents' labor income. Commuting generates a leakage of the local production benefits of pollution as non-resident commuters take the wages to their home jurisdictions. Jurisdictions may thus face a prisoners¿ dilemma, in which they all push for pollution levels that are too low (race-to-the-top). Fiercer competition in the common labor market due to a larger number of jurisdictions intensifies this race-to-the-top in environmental regulation; whereas transboundary pollution, local ownership of firms, pollution taxes, and payroll taxes reduce the incentive for overly restrictive pollution policies.

SAVEYN Bert; 

2013-04-22

SPRINGER

JRC45008

0927-5940,   

http://rd.springer.com/article/10.1007%2Fs10797-012-9228-x,    https://publications.jrc.ec.europa.eu/repository/handle/JRC45008,   

10.1007/s10797-012-9228-x,