Abstract
The evidence on hypothetical linkages between environmental regulation and competitiveness is assembled and addressed. Overall, the evidence suggests that the truth regarding the relationship between environmental protection and international competitiveness lies in between the 2 extremes of the current debate. International differences in environmental regulatory stringency pose insufficient threats to US industrial competitiveness to justify substantial cutbacks in domestic environmental regulations. At the same time, such regulation clearly imposes large direct and indirect costs on society, and there is no evidence supporting the enactment of stricter domestic environmental regulations to stimulate economic competitiveness. Instead, policy makers should do what they can to establish environmental priorities and goals that are consistent with the real tradeoffs that are inevitably required by regulatory activities; that is, environmental goals should be based on careful balancing of benefits and costs.