On Efficiency of Decentralized Environmental Regulation

Mitch Kunce () and Jason Shogren

Journal of Regulatory Economics, 2005, vol. 28, issue 2, 129-140

Abstract: Contrary to conventional wisdom about an environmental race to the bottom, the theoretical literature as exemplified by Oates and Schwab [1988, Journal of Public Economics, 35:333–354] maintains that homogeneous jurisdictions’ decentralized choices are likely to be socially optimal because each locale sets capital tax rates to zero and sets optimal environmental standards. This paper shows the well-received Oates–Schwab-style efficiency result is not likely if allowed aggregate-emissions act as a firm-augmenting public input that benefits mobile firms. Copyright Springer Science+Business Media, Inc. 2005

Keywords: interjurisdictional competition; fiscal federalism; environmental federalism; H71; H73 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (7)

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DOI: 10.1007/s11149-005-3105-9

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