Political jurisdictions have incentives to promote pollution spillovers to capture the benefits of economic production within their borders while exporting the environmental costs to their neighbors. The authors examine the extent to which U.S. states engage in this type of free-riding behavior....

Interjurisdictional pollution spillovers are a critical issue in U.S. environmental policy. When policy responsibility is decentralized, state governmental agencies have incentives to promote these externalities to capture the benefits of economic activity within their borders while compelling...