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Environmental Regulatory Competition: A Status Report and Some New Evidence

  • Levinson, Arik

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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Article provided by National Tax Association in its journal National Tax Journal.

Volume (Year): 56 (2003)
Issue (Month): 1 (March)
Pages: 91-106

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Handle: RePEc:ntj:journl:v:56:y:2003:i:1:p:91-106
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  8. Randy Becker & Vernon Henderson, 2000. "Effects of Air Quality Regulations on Polluting Industries," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 379-421, April.
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  12. Pashigian, B Peter, 1985. "Environmental Regulation: Whose Self-interests Are Being Protected?," Economic Inquiry, Western Economic Association International, vol. 23(4), pages 551-84, October.
  13. Hilary Sigman, 2003. "Letting States do the Dirty Work: State Responsibility for Federal Environmental Regulation," NBER Working Papers 9451, National Bureau of Economic Research, Inc.
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  15. Levinson, Arik, 1999. "NIMBY taxes matter: the case of state hazardous waste disposal taxes," Journal of Public Economics, Elsevier, vol. 74(1), pages 31-51, October.
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  17. 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.
  18. Arik Levinson, 1999. "An Industry-Adjusted Index of State Environmental Compliance Costs," Working Papers gueconwpa~00-00-08, Georgetown University, Department of Economics.
  19. Gordon, Roger H, 1983. "An Optimal Taxation Approach to Fiscal Federalism," The Quarterly Journal of Economics, MIT Press, vol. 98(4), pages 567-86, November.
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  21. Daniel L. Millimet & John A. List, 2003. "A Natural Experiment on the 'Race to the Bottom' Hypothesis: Testing for Stochastic Dominance in Temporal Pollution Trends," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(4), pages 395-420, 09.
  22. Robert Tannenwald, 1998. "Devolution: the new federalism, an overview," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 1-12.
  23. Arik Levinson, 1999. "State Taxes and Interstate Hazardous Waste Shipments," American Economic Review, American Economic Association, vol. 89(3), pages 666-677, June.
  24. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
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