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The Case of the Missing Pollution Haven Hypothesis

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  • Daniel Millimet

    ()

  • John List

    ()

Abstract

One particularly vexing puzzle for economists and policymakers over the past several decades concerns the empirical significance of the theoretically predicted pollution haven hypothesis. While neoclassical theory and conventional wisdom both surmise that local economies will suffer deleterious effects from stricter environmental regulations, empirical studies have largely failed to validate such claims. This study utilizes the method of matching to show that the impact of stricter regulation is heterogeneous spatially, varying systematically based on location-specific attributes. Previous studies that assume a homogenous response may therefore inadvertently mask the overall impact of more stringent regulations by pooling unaffected and affected regions. Copyright Kluwer Academic Publishers 2004

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File URL: http://hdl.handle.net/10.1007/s11149-004-7550-7
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Bibliographic Info

Article provided by Springer in its journal Journal of Regulatory Economics.

Volume (Year): 26 (2004)
Issue (Month): 3 (08)
Pages: 239-262

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Handle: RePEc:kap:regeco:v:26:y:2004:i:3:p:239-262

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Web page: http://www.springerlink.com/link.asp?id=100298

Related research

Keywords: pollution haven hypothesis; environmental regulation; treatment effects; propensity score; matching;

References

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  1. Randy Becker & Vernon Henderson, 2000. "Effects of Air Quality Regulations on Polluting Industries," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 379-421, April.
  2. Abay Mulatu & Raymond J.G.M. Florax & Cees A.A.M. Withagen, 2001. "Environmental Regulation and Competitiveness," Tinbergen Institute Discussion Papers 01-039/3, Tinbergen Institute.
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Citations

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Cited by:
  1. Kukenova, Madina & Monteiro, Jose-Antonio, 2008. "Does Lax Environmental Regulation Attract FDI when accounting for "third-country" effects?," MPRA Paper 11321, University Library of Munich, Germany, revised Sep 2008.
  2. Rahel Aichele & Gabriel J. Felbermayr, 2011. "Estimating the effects of Kyoto on bilateraltrade flows using matching econometrics," Ifo Working Paper Series Ifo Working Paper No. 119, Ifo Institute for Economic Research at the University of Munich.
  3. Millimet, Daniel L. & Roy, Jayjit, 2011. "Three New Empirical Tests of the Pollution Haven Hypothesis When Environmental Regulation is Endogenous," IZA Discussion Papers 5911, Institute for the Study of Labor (IZA).
  4. Jorge García & Shakeb Afsah & Thomas Sterner, 2009. "Which Firms are More Sensitive to Public Disclosure Schemes for Pollution Control? Evidence from Indonesia’s PROPER Program," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 42(2), pages 151-168, February.
  5. Baomin Dong & Jiong Gong & Xin Zhao, 2012. "FDI and environmental regulation: pollution haven or a race to the top?," Journal of Regulatory Economics, Springer, vol. 41(2), pages 216-237, April.
  6. Frankel, Jeffrey A., 2009. "Environmental Effects of International Trade," Scholarly Articles 4481652, Harvard Kennedy School of Government.
  7. Adu, George, 2011. "Effects on growth of environmental policy in a small open economy," Working Papers 118225, Swedish University of Agricultural Sciences, Department of Economics.
  8. Abay Mulatu & Reyer Gerlagh & Dan Rigby & Ada Wossink, 2010. "Environmental Regulation and Industry Location in Europe," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 45(4), pages 459-479, April.
  9. Ulrich Wagner & Christopher Timmins, 2009. "Agglomeration Effects in Foreign Direct Investment and the Pollution Haven Hypothesis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 43(2), pages 231-256, June.
  10. Cave, Lisa A. & Blomquist, Glenn C., 2008. "Environmental policy in the European Union: Fostering the development of pollution havens?," Ecological Economics, Elsevier, vol. 65(2), pages 253-261, April.
  11. Rahel Aichele, 2013. "Trade, Climate Policy and Carbon Leakage - Theory and Empirical Evidence," ifo Beiträge zur Wirtschaftsforschung, Ifo Institute for Economic Research at the University of Munich, number 49, July.
  12. Koubi, Vally & Bernauer, Thomas, 2008. "Globalization and the environment," Proceedings of the German Development Economics Conference, Zurich 2008 24, Verein für Socialpolitik, Research Committee Development Economics.
  13. Garcia, Jorge H. & Afsah, Shakeb & Sterner, Thomas, 2008. "What Kinds of Firms Are More Sensitive to Public Disclosure Programs for Pollution Control? The Case of Indonesia’s PROPER Program," Discussion Papers dp-08-12-efd, Resources For the Future.
  14. Yihsu Chen & Andrew Liu, 2013. "Emissions trading, point-of-regulation and facility siting choices in the electric markets," Journal of Regulatory Economics, Springer, vol. 44(3), pages 251-286, December.

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