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Rehabilitating Interstate Competition: Rethinking the "Race-to-the-Bottom" Rationale for Federal Environmental Regulation
Abstract
An influential justification for placing responsibility for environmental regulation at the federal level is that otherwise states would engage in a socially undesirable "race to the bottom, " making their environmental standards too lax in an effort to attract and retain industry. After discussing the difficulties in empirically testing this theory, Professor Revesz shows that race-to-the-bottom arguments encounter no support in existing models of interurisdictional competition. He then establishes that even if there were a race to the bottom over environmental standards, federal regulation would not be an effective response: faced with strict federal environmental standards, states concerned with attracting industry would relax regulatory controls in other areas. Professor Revesz concludes by showing that in the corporate-charter and bank-charter literatures, the race-to-the-bottom label has been used to identify issues distinct from those implicated in the term in the environmental context, and he offers a conceptual typology that elucidates the relevant distinctions.
... 45 59 See e.g. Revesz (1992). 60 Macey (2008), p. 112. ...
Corporate rules are often analysed without attending to the strengths and limitations of the body making, monitoring, or implementing those rules. However, corporate rule-making and implementation bodies (RMIBs) over which policymakers have the most influence-legislatures and public regulatory agencies, stock exchanges, and private/professional bodies with a degree of self-regulatory autonomy-have an important bearing on the effectiveness of rules. This Article advances a framework to understand how RMIBs influence the effectiveness of corporate rules by critically examining five core features of RMIBs: (a) their incentives for making and implementing the rules; (b) the nature and extent of regulatory competition; (c) available and relative resources; (d) rule-making speed and the certainty of those decisions; and (e) their legitimacy in the eyes of the regulated parties and relevant stakeholders. To illustrate the framework concretely, this Article conducts case studies exploring how it matters who makes the rules on climate-related risks disclosure and in the UK's recently enacted Financial Services and Markets Act 2023.
... 45 59 See e.g. Revesz (1992). 60 Macey (2008), p. 112. ...
Corporate rules are often analysed without attending to the strengths and limitations of the body making, monitoring, or implementing those rules. However, corporate rule-making and implementation bodies (RMIBs) over which policymakers have the most influence-legislatures and public regulatory agencies, stock exchanges, and private/professional bodies with a degree of self-regulatory autonomy-have an important bearing on the effectiveness of rules. This Article advances a framework to understand how RMIBs influence the effectiveness of corporate rules by critically examining five core features of RMIBs: (a) their incentives for making and implementing the rules; (b) the nature and extent of regulatory competition; (c) available and relative resources; (d) rule-making speed and the certainty of those decisions; and (e) their legitimacy in the eyes of the regulated parties and relevant stakeholders. To illustrate the framework concretely, this Article conducts case studies exploring how it matters who makes the rules on climate-related risks disclosure and in the UK's recently enacted Financial Services and Markets Act 2023.
... That is, the spillover effect of environmental pollution leads to the inability of local governments under decentralization to cope with the hazards of cross-domain pollution (Shobe 2020). Under competition for tax sources, decentralization may lead to a "race to the bottom" competition among polluting firms (Revesz 1992) and induce the "polluting neighbors" behavior (Cai et al. 2016a), which makes centralization a critical strategy to solve these problems. When evaluating the environmental governance effectiveness of centralization or decentralization, some literature advocates using possible exogenous shocks to address potential endogeneity issues (Hu et al. 2021;Cai et al. 2023). ...
How to reduce air pollution is an essential topic of environmental governance. Existing research has predominantly concentrated on the decentralization effect within the environmental field, leaving a gap in exploring non-environmental decentralization effects. This paper exploits a quasi-experiment of “counties power expansion (CPE)” reform in China to examine the effect of administrative decentralization on air pollution. Administrative decentralization will reorganize authority in economic and social matters and redistribute fiscal responsibility and resources for specific targets among multilevel governments. Employing a county-level dataset from 1999 to 2019 in China, we find that administrative decentralization significantly raises air pollution by about 2%. Our results further suggest that air pollution is mainly attributed to the increment of resource input and firm expansion. We find that geographical location will influence the air pollution effect. The policymaker should consider an inclusive intuitional design when launching administrative decentralization.
... Thus, a pollution-oriented industry would shift from a strong-regulation to a weaker-regulation country [31], and international trade may facilitate this transformation. Developing countries usually relax their regulations to reduce the cost of production of exporting firms, which may help the exporting firms to achieve a competitive advantage in international trade [32]. Moreover, developing countries might relax their regulations to attract FDI. ...
China is the largest total pollution emitter country on the globe and a vast literature has investigated the environmental Kuznets curve (EKC) hypothesis in China. Thus, we aim to review empirical studies on the testing of the EKC hypothesis using different pollution proxies and area samples in China. The EKC hypothesis can be validated by establishing an inverted U-shaped or an N-shaped relationship between pollution and economic growth. In this review of the Chinese literature, the validity of the EKC hypothesis is found more often than its absence. In comparison, a higher proportion of the studies validated the EKC hypothesis using global pollution proxies compared with local pollution proxies. Moreover, a greater percentage of the studies substantiated the EKC hypothesis using Chinese provincial and city-level data compared with aggregate national data. To validate these findings, we applied logistic regression, and the chance of the validity of the EKC hypothesis was found to be 5.08 times higher than the absence of the EKC if a study used a global pollution proxy. Moreover, the chance of the existence of the EKC hypothesis was found to be 4.46 times higher than the nonexistence of the EKC if a study used Chinese provincial, city, sectoral, or industrial data.
Should the European Union regulate criminal justice? This open access book explores the question forensically, establishing whether a compelling normative justification for EU action in the field exists.
It develops an integrated standard based on the perspectives of the effective allocation of regulatory authority between the EU and the Member States, representation-based political theories, and harm-based theories of criminal law. This is a work that will be welcomed not only by EU criminal law scholars, but also by practitioners, judges and policymakers.
Volume 124 in the Series Modern Studies in European Law
Background
Natural resource rents (NRRs) may determine the environment and economic growth of the GCC countries due to their over-reliance on the natural resource sector. NRRs are the source of income in resource-abundant GCC countries. So, increasing income of these countries could pollute the environment by increasing overall economic activities. Consequently, NRRs could determine carbon productivity in the GCC region through increasing income and carbon emissions.
Methods
The effects of trade openness (TO), foreign direct investment (FDI), urbanization, and oil and natural gas rents on carbon productivity (CP) are examined in the GCC region from 1980–2021 using the spatial Durbin model.
Results
The CP of the GCC countries has spillovers in their neighboring countries. Oil rent reduces carbon productivity in domestic economies and the entire GCC region. Natural gas rent, TO, and FDI increase, and urbanization reduces carbon productivity in neighboring economies and the entire GCC region. Moreover, urbanization reduces carbon productivity in domestic economies as well. The study recommends the GCC countries to reduce reliance on oil rent and increase globalization in terms of TO and FDI in the region to promote carbon productivity. Moreover, GCC countries should also focus more on natural gas rent instead of oil rent to raise carbon productivity.
Environmental management literature has extensively explored why the regulated community, particularly private firms, join voluntary environmental programs (VEPs) in which participants promise to regulate “beyond compliance.” However, the notion of locus has been rarely considered a key determinant of a firm's VEP participation. This study examines how regional pressures encourage firms' VEP participation. Drawing on a dataset of over 1000 industrial facilities related to five government sponsored VEPs in Korea, it investigates how three types of regional pressures—regulators, industrial peers, and community members—affect firms' decision to join VEPs. The major findings are that firms located in the same region as their conglomerate peers, as well as firms located in a place where a large amount of odor pollutant is released, are more likely to participate in VEPs. These results demonstrate the impact of social attributes derived from the geographic location of firms on facilities' VEP engagement.
This Article applies a model based on the interest-group theory of regulation to explain and predict the legal rules that affect the affairs of corporations chartered in Delaware. Two existing theories purport to explain and predict these legal rules. The traditional, "reformist" theory depicts Delaware as the winner of a deplorable "race to the bottom" in which competition among the states for franchise taxes has led Delaware to produce a system of corporate law rules that permits corporate managers to exploit shareholders for their own ends. More recently, the law and economics movement has produced a competing theory, the corporate federalist theory, which posits that the desire to obtain income from corporate charters has led Delaware and other states to develop efficient corporate law rules. Far from exploiting shareholders, this theory holds that these rules actually benefit shareholders by increasing the wealth of corporations chartered in states with these rules.
A perennial issue in corporate law reform is the desirability of afederal system. For notwithstanding the invasive growth of regulationby the national government, principally through the federal securitieslaws, corporate law is still the domain of the states. While notwo corporation codes are identical, there is substantial uniformityacross the states. Provisions typically spread in a discernible S-shapedpattern, as one state amends its code in response to another state'sinnovation. The revision process is often analogized in the academicliterature to market competition, in which states compete to providefirms with a product, corporate charters, in order to obtain franchisetax revenues. This characterization is the centerpiece of the federalismdebate in corporate law-whether competition, and hence a federalsystem, benefits shareholders. The hero-or culprit-in thedebate is Delaware, the most successful state in the market for corporatecharters.
The Dual Banking System: A Model of Competition in Regulation For a view that this competition is beneficial The Regulation of Banks and Bank Holding Companies, 73 Va. L Rev
- Scott Daniel
- R Fischel
Scott, The Dual Banking System: A Model of Competition in Regulation, 30 Stan. L Rev. 1,
12-13 (1977) (quoting Arthur Burns). For a view that this competition is beneficial, see Daniel
R. Fischel et al., The Regulation of Banks and Bank Holding Companies, 73 Va. L Rev. 301,
335 (1987).
Draining the Dismal Swamp: The Case for Federal Choice or Law Statutes
- H Michael
- Gottesman
Michael
H. Gottesman, Draining the Dismal Swamp: The Case for Federal Choice or Law Statutes, 80
Imaged with the Permission of N
- Id
Id. at 715.
Imaged with the Permission of N.Y.U. Law Review
NEW YORK UNIVERSITY
LAW REVIEW
MEMBERS oF THE LAW REVIEWv 1992-1993
The important recent pieces in this debate include Lucian A. Bebehuk, Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law
- Ralph K Winter
- State Law
Ralph K. Winter, State Law, Shareholder Protection, and the Theory of the Corporation, 6 J. Legal Stud. 251, 262-73 (1977). The important recent pieces in this debate include
Lucian A. Bebehuk, Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law, 105 Harv. L. Rev. 1435 (1992);
- L Cardozo
Cardozo L. Rev.
709 (1987) [hereinafter Romano, State Competition];
quoting Arthur Burns). For a view that this competition is beneficial, see Daniel R. Fischel et al., The Regulation of Banks and Bank Holding Companies, 73 Va
- Scott
Scott, The Dual Banking System: A Model of Competition in Regulation, 30 Stan. L Rev. 1,
12-13 (1977) (quoting Arthur Burns). For a view that this competition is beneficial, see Daniel
R. Fischel et al., The Regulation of Banks and Bank Holding Companies, 73 Va. L Rev. 301,
335 (1987).