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Environmental Regulatory Competition: A Status Report and Some New Evident

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Concerns about devolving environmental regulatory powers to lower levels of government permeate debates in the U.S. and Europe about the appropriate level of regulatory authority. In theory, given a long list of conditions, regulatory competition by local governments can be efficient in the same way that tax competition can be efficient: local welfare-maximizing governments set the same standards or taxes as would an omniscient welfare-maximizing central government. In practice, however, these conditions are improbable, especially in the case of environmental regulations, and local competition is potentially inefficient. In the past two years, evidence has begun to emerge regarding the empirical importance of these inefficiencies. In this paper, I describe this nascent literature, drawing parallels to the tax competition literature, suggest some avenues for empirical research, and present some new results.

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Paper provided by Georgetown University, Department of Economics in its series Working Papers with number gueconwpa~02-02-07.

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Date of creation: 07 Feb 2002
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Handle: RePEc:geo:guwopa:gueconwpa~02-02-07

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Postal: Georgetown University Department of Economics Washington, DC 20057-1036
Phone: 202-687-6074
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Web page: http://econ.georgetown.edu/

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Postal: Marcia Suss Administrative Officer Georgetown University Department of Economics Washington, DC 20057-1036
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Web: http://econ.georgetown.edu/

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  18. Arik Levinson, 1999. "State Taxes and Interstate Hazardous Waste Shipments," American Economic Review, American Economic Association, vol. 89(3), pages 666-677, June.
  19. Fredriksson, Per G. & Millimet, Daniel L., 2002. "Is there a 'California effect' in US environmental policymaking?," Regional Science and Urban Economics, Elsevier, vol. 32(6), pages 737-764, November.
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  23. Fredriksson, Per G. & Millimet, Daniel L., 2002. "Strategic Interaction and the Determination of Environmental Policy across U.S. States," Journal of Urban Economics, Elsevier, vol. 51(1), pages 101-122, January.
  24. Robert Tannenwald, 1998. "Devolution: the new federalism, an overview," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 1-12.
  25. Carlo Carraro & Gilbert E. Metcalf, 2001. "Behavioral and Distributional Effects of Environmental Policy," NBER Books, National Bureau of Economic Research, Inc, number carr01-1.
  26. Michael Greenstone, 2001. "The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 & 1977 Clean Air Act Amendments and the Census of Manufactures," NBER Working Papers 8484, National Bureau of Economic Research, Inc.
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