Environmental policy in the European Community: harmonization or national standards?

This paper explores the claim that the setting of environmental standards needs to be centralized in order to avoid a competitive race to the bottom. Such a claim represents a fundamental challenge to the basic theory of fiscal federalism. But the theory of interjurisdictional competition, although diverse in approach and findings, does not provide a fully compellig basis for this proposition. Moreover, the terminology is itself misleading. The paper suggests that in the absence of environmental spillover effects across jurisdictional boundaries, there remains a strong case for decentralized environmental management.