In the recession of the early 1990s, California’s cities and counties scrambled to attract and retain businesses, and several cities lavished public resources on private projects that showed little promise of benefiting those communities. Partly in response to these high-profile cases, Governor Davis signed a law to limit competition among localities for big box retailers and auto malls. Despite the media attention given to these cases and the subsequent legislative action, there has been little research on competition among localities for economic development. In this monograph, the authors use detailed survey data to characterize local economic development policy in Southern California. They also address apprehensions over local competition for economic development and reframe the regulation debate in terms of the state-local power balance.