Abstract

Federalism is an essential part of the Constitution’s design. The division of sovereign power between the States and the federal government helps foster interjurisdictional competition, which, in turn, checks government power. Provided a right of exit is maintained, the excessive imposition of economic burdens in one jurisdiction will cause taxpayers and businesses to flee to other jurisdictions. For this reason, federalism often is seen as a friend of the free market.

Provided states cannot externalize the costs of their own policy choices, robust interjurisdictional competition facilitates the enactment of better public policy at the state level. Rather than inducing a “race to the bottom,” such competition can create a race toward the top. Although those of us who generally favor freer markets believe federalism will advance that cause, those who believe more stringent regulation is welfare‐enhancing should support interjurisdictional competition too. On both theoretical and empirical grounds, competition among jurisdictions is a powerful means to discover and promote the policies that are most effective at providing people with what they desire.

This abstract has been adapted from the Article's text.

Document Type

Article

Publication Date

Winter 2012

Publication Information

35 Harvard Journal of Law & Public Policy 89-99 (2012)

Comments

Written for the symposium Capitalism, Markets, and the Constitution, the Thirtieth Annual Federalist Society National Student Symposium on Law and Public Policy (2011) held at the University of Virginia Law School.

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