We explore how the local environment is related to properties of active galactic nuclei (AGNs) of various luminosities. Recent simulations and observations are converging on the view that the extreme luminosity of quasars, the brightest of AGNs, is fueled in major mergers of gas-rich galaxies. In such a picture, quasars, the highest luminosity AGNs, are expected to be located in regions with a higher density of galaxies on small scales where mergers are more likely to take place. However, in this picture, the activity observed in low-luminosity AGNs is due to secular processes that are less dependent on the local galaxy density. To test this hypothesis, we compare the local photometric galaxy density on kiloparsec scales around spectroscopic type I and type II quasars to the local density around lower-luminosity spectroscopic type I and type II AGNs. To minimize projection effects and evolution in the photometric galaxy sample we use to characterize AGN environments, we place our random control sample at the same redshift as our AGNs and impose a narrow redshift window around both the AGNs and control targets. Our results support these merger models for bright AGN origins. We find that the brightest sources have overdensities that increase on the smallest scales compared to dimmer sources. In addition, we investigate the nature of the quasar and AGN environments themselves and find that the increased overdensity of early-type galaxies in the environments of bright type I sources suggests that they are located in richer cluster environments than dim sources. We measure increased environment overdensity with increased quasar black hole mass, consistent with the well-known M _DMH – M_BH relationship, and find evidence for quenching in the environments of high accretion efficiency type I quasars.