ENVIRONMENTAL REGULATORY POLICY: POLITICAL ECONOMY, INDUSTRIAL GEOGRAPHY, AND INTERGOVERNMENTAL FISCAL EFFECTS

Environmental regulatory policy in the U.S. is a mixture of federal, state, and local activity and impacts. This is true of air quality regulations, which are governed at the federal level by the Clean Air Act. This dissertation analyzes both the political economy of federal environmental regulations and the empirical effects of ozone regulations under the Clean Air Act.A political economy model is developed that offers a motivation for political support of national environmental policy that regulates strictly local pollution. Altering local environmental policies in other jurisdictions will cause capital migration, which may increase local welfare. Thus, individuals have an incentive to influence local policies in other jurisdictions. National environmental policy then becomes a potential tool for inter-jurisdictional competition.The empirical impacts of ground-level ozone regulations under the Clean Air Act are also analyzed. The Clean Air Act established minimum air quality standards; localities failing to meet the established standards are classified as nonattainment areas and are subject to additional environmental regulations. These new regulations have a direct impact on polluting industries, and therefore also an indirect impact on the revenues and expenditures of local governments.First, nonattainment status is seen to alter regional industrial geography. Overall economic activity declines in both nonattainment areas and the surrounding jurisdictions. Gaining attainment status partially mitigates these impacts, although to some extent theeconomic impacts in both nonattainment areas and the surrounding jurisdictions do permanently persist. I also find evidence that manufacturing activity relocates from nonattainment areas to surrounding areas that face more lenient air quality regulations.Ozone nonattainment status is also seen to produce fiscal effects for local governments as changes in industrial geography alter local tax bases. Revenues and expenditures decline in regulated population centers, while they increase in surrounding areas. These increases diminish with distance from the urban center. Also, the fiscal impacts persist even after attainment status has been gained