"Beggar Thy Neighbor": Testing for Free Riding in State-Level Endangered Species Expenditures.

An important public policy question that remains unresolved is whether devolution will enhance sensible policy making by exploiting informational asymmetries or, instead, trigger a "beggar thy neighbor" response and stimulate free riding amongst localities. We analyze this question within the framework of U.S. environmental policymaking by scrutinizing a unique panel data set on state-level endangered species expenditure patterns. Our empirical estimates are consistent with the notion that states free ride, which may lead to an expenditure equilibrium that is not Pareto efficient. Copyright 2002 by Kluwer Academic Publishers