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This article examines several of the key hypotheses suggested by the race to the bottom theory in environmental regulation. The research studies annual state-level enforcement of federal air, water, and hazardous waste pollution control regulation, covering the period from 1985 to 2000. Specifically, the study estimates a series of strategic interaction models to examine whether a state's environmental regulatory behavior is influenced by the regulatory behavior of the states with which it competes for economic investment. While there is clear evidence of strategic interaction in state environmental regulatory behavior, states do not respond in the asymmetric manner suggested by the race to the bottom theory.

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