Interstate Hazardous Waste Shipments and Disposal Taxes

This paper links the theoretical and empirical literatures on inter- jurisdictional tax and regulatory competition, focusing on the case of state hazardous waste disposal taxes. It begins by demonstrating that local environmental taxes can be inefficient, and that the inefficiency depends on the tax elasticity of polluters' responses. The paper then uses panel data from the Toxics Release Inventory to estimate the magnitude of the tax elasticities, and to demonstrate the empirical relevance of the theoretical inefficiency of local taxes.