Assessing U.S. State Susceptibility to Environmental Regulatory Competition

Abstract

In this article, I examine the environmental race-to-the-bottom argument by studying whether state susceptibility to interstate economic competition helps explain which U.S. states engage in environmental regulatory competition. Specifically, I create a susceptibility index using four state economic attributes: overall growth, unemployment, manufacturing growth, and manufacturing employment. Studying state enforcement of federal environmental programs, I find little evidence that states, which are theoretically more susceptible to interstate economic competition are more likely to respond strategically to the regulatory behavior of economic competitor states. These results cast doubt on the idea that the environmental regulatory competition predicted by race-to-the-bottom theory is mediated by intrastate economic conditions.