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Decentralized Environmental Regulation with Agglomeration Forces

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  • Mitch Kunce

Abstract

Convention, in the setting of interjurisdictional economic competition, envisions a race-to-the-bottom when decentralized jurisdictions, in their eagerness to attract commerce, introduce policies to reduce business costs in the form of tax structures that under-provide local public goods and lax pollution standards that lower environmental quality. The current body of empirical evidence, however, does not provide compelling support for the race within the context of environmental federalism. The theoretical work presented herein debits the inventory of literature questioning the race-to-the-bottom claim by introducing agglomeration forces into the standard model. When agglomeration influences are weak to moderate, the race is still on. Conversely, when agglomeration forces are strong, fiscal competition influences are mitigated therefore providing jurisdiction's incentives to strengthen local environmental standards. Â JEL classification numbers: H73, R12, R30.

Suggested Citation

  • Mitch Kunce, 2022. "Decentralized Environmental Regulation with Agglomeration Forces," Business & Entrepreneurship Journal, SCIENPRESS Ltd, vol. 11(1), pages 1-2.
  • Handle: RePEc:spt:busent:v:11:y:2022:i:1:f:11_1_2
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    References listed on IDEAS

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    Cited by:

    1. Mitch Kunce, 2023. "Decentralized Pollution Standard Setting with Agglomeration Forces Present in a Model of Specific Firm Mobility," Business & Entrepreneurship Journal, SCIENPRESS Ltd, vol. 12(1), pages 1-3.

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    More about this item

    Keywords

    Environmental federalism; Interjurisdictional competition; External economies of scale.;
    All these keywords.

    JEL classification:

    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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