Air pollution, particularly PM2.5 particulate matter, is a significant issue in Santiago, the capital of Chile. Santiago’s pollution problem is exacerbated by its unique geographic location nestled against the Andes mountain range in the central valley of Chile. This paper uses network models that were developed primarily to analyze systemic risk in the financial system to identify those locations in the city that are most important for explaining PM2.5 levels.

In this paper we discuss the choice of taxation or regulation of environmental externalities. The subject might appear to be a well-trodden path, but we believe we have a new angle on this well-established question. We think we are being quite realistic when we assume that corrupt practices lurk behind every corner, threatening to derail the good intents of any regulator.