The Economics of Federalism and the Proper Scope of the Federal Commerce Power

The study of the economics of federalism has emerged as a distinct field. While the insights of that study have been applied in understanding the logic behind the dormant commerce clause, they have not been used in analyzing the affirmative scope of the federal commerce power. The author suggests that the economics of federalism can provide both a justification for and a limitation upon the federal commerce power. Specifically, he suggests that the federal government ought to be able to regulate only those areas of commerce where state regulation would be inefficient due to externalities.

Furthermore, he argues, this conception of federal power is both suggested by the evils that the commerce clause was designed to cure and consistent with the understanding of the framers.