Using Competition-Based Regulation to Bridge the Toxics Data Gap
49 Pages Posted: 6 Feb 2008
The Toxic Substances Control Act (TSCA) creates an adverse selection problem with regard to the manufacture of chemicals since neither the testing of chemicals nor the production of safer chemicals is generally required or rewarded by the regulatory system. As a result, better tested and safer chemicals enjoy few, if any competitive benefits in the marketplace. At the same time, the adverse selection created by existing regulation is locked into place by a strong political block of manufacturers who enjoy the benefits of under-regulation and the lower chance of penalties in the market and through tort litigation.
To address this intransigent problem, I propose a competition-based mechanism for generating incentives for testing and chemical safety through an adjudication process by which manufacturers can petition EPA to have their chemicals certified as superior to inferior chemicals or chemical mixtures. If a competitor establishes there are measurable and significant differences between their product and a competitor product with regard to health or environmental consequences, EPA may not only certify this environmental superiority relative to the inferior chemical through its labeling authorities, but in some cases might restrict the use of the inferior chemical or even ban it entirely.
After considering how a competition-based approach to toxic substances regulation could work under TSCA, I conclude by considering how this approach applies to other problematic areas of toxics regulation, including the regulation of pesticides, nanotechnology, drug, and other pollution control problems.
Keywords: toxic substance, regulation, competition, market-based, adverse selection
Suggested Citation: Suggested Citation