This study develops a differential game model to examine transboundary water pollution control among the central government, local governments on both riverbanks, and industrial enterprises. It compares cost-sharing and non-cost-sharing scenarios, revealing that cost-sharing enhances pollution control efforts, improves environmental quality, and increases economic and social returns. In contrast, absent cost-sharing, economic competition reduces investment in pollution control, jeopardizing long-term sustainability. The findings emphasize the importance of central government oversight, the role of subsidies in enhancing industrial pollution control, and the need for inter-governmental cooperation to manage regional competition and improve overall governance. The conclusions are supported by numerical analysis, with sensitivity analysis of key parameters.