This assumes the losses to emigration are higher than the efficiency improvements. I suspect that's not how it works out in practice, but I don't have the data to support this.
It's also reasonable to assume internalizing externalities can drive efficiency improvements everywhere. Would batteries by as efficient and available for installation in TX if CA hadn't subsidized them for a decade prior?
Other states can free-ride off of some of these innovations. But we also have to put up with the ways in which California regulations regarding fuel efficiency or whatever else hurt our markets. It's not clear that California's subsidies outweigh these effects.
Without data, we're firmly restricted to the realm of hypotheticals, but even there I'm struggling to comprehend how this would work. Can you provide an example of such an effect?
California said they want no ICE vehicle sales by 2035 or something. They're also restricting ICE 18 wheelers. This has a huge impact on the viability of manufacturing these products for nationwide purchase. My guess is the goals will not be met. California may even have a backlash. But in the meantime markets will have been collateral damage.
It's also reasonable to assume internalizing externalities can drive efficiency improvements everywhere. Would batteries by as efficient and available for installation in TX if CA hadn't subsidized them for a decade prior?