Endogenous Decentralization in Federal Environmental Policies

37 Pages Posted: 12 Jul 2012 Last revised: 14 Feb 2015

See all articles by Howard F. Chang

Howard F. Chang

University of Pennsylvania Law School

Hilary Sigman

Rutgers University - Department of Economics; National Bureau of Economic Research (NBER)

Leah Goldman Traub

Lord Abbett; Rutgers, The State University of New Jersey

Date Written: 2014

Abstract

Under most federal environmental laws and some health and safety laws, states may apply for “primacy,” that is, authority to implement and enforce federal law, through a process known as “authorization.” Some observers fear that states use authorization to adopt more lax policies in a regulatory “race to the bottom.” This paper presents a simple model of the interaction between the federal and state governments in such a scheme of partial decentralization. Our model suggests that the authorization option may not only increase social welfare but also allow more stringent environmental regulations than would otherwise be feasible. Our model also suggests that the federal government may choose its policies so that states that desire more strict regulation authorize, while other states remain under the federal program. We then test this hypothesis using data on federal regulation of water pollution and of hazardous waste, which are two of the most important environmental programs to allow authorization. We find that states that prefer more environmental protection authorize more quickly under both policies. This evidence suggests that states seek authorization to adopt more strict policies instead of more lax policies compared to federal policies.

Keywords: Cooperative federalism, political economy, environmental law and regulation, economics, intergovernmental relations, federalism, government policy, air pollution, hazardous waste, empirical research, administrative law, primacy, authorization, decentralization, pollution control

JEL Classification: H77, K32, Q53, Q58

Suggested Citation

Chang, Howard F. and Sigman, Hilary A. and Traub, Leah Goldman, Endogenous Decentralization in Federal Environmental Policies (2014). International Review of Law and Economics, Vol. 37, P. 39, 2014, U of Penn, Inst for Law & Econ Research Paper No. 12-25, Available at SSRN: https://ssrn.com/abstract=2103699 or http://dx.doi.org/10.2139/ssrn.2103699

Howard F. Chang (Contact Author)

University of Pennsylvania Law School ( email )

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215-573-2025 (Fax)

Hilary A. Sigman

Rutgers University - Department of Economics ( email )

75 Hamilton Street
New Brunswick, NJ 08901
United States

HOME PAGE: http://econweb.rutgers.edu/sigman

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Leah Goldman Traub

Lord Abbett ( email )

90 Hudson Street
Jersey City, NJ 07302
United States

Rutgers, The State University of New Jersey ( email )

Economics Department
75 Hamilton Street
New Brunswick, NJ 08901
United States

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