 Is There an Environmental Race to the Bottom in an Endogenous Growth Model of Interjurisdictional Competition?Sanghyun Hwang Hitotsubashi Journal of Economics, 2022, vol. 63, issue 1, 24-50 Abstract: This paper explores the impact of increasing capital mobility on regional growth and environment. I develop an endogenous growth model in which each local government competes against the others to induce mobile stock of capital into its region. Then I show that an increase in capital mobility generates “tax importing” due to which each locality experiences a higher growth rate and more degraded environment. That is, the increasing mobility dampens the capital tax and transfers the burden of pollution abatement to the locality. This finding supports the hypothesis of “race to the bottom” in environmental standards. Identifying a reduction in overall welfare of residents, I consider two alternative federal interventions in the model: uniform environmental standard and requirement of lump sum transfer (or tax). Both of these federal instruments enhance the residentsʼ welfare. Keywords: Endogenous Growth Model; Interjurisdictional Competition; Environmental Race to the Bottom (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjec:v:63:y:2022:i:1:p:24-50 DOI: 10.15057/hje.2022002 Access Statistics for this article More articles in Hitotsubashi Journal of Economics from Hitotsubashi University Contact information at EDIRC. |
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