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Location choice of FDI firms and environmental regulation reforms in China

Author

Listed:
  • Liguo Lin

    (Shanghai University of Finance and Economics
    Ministry of Education)

  • Wei Sun

    (Shanghai University of Finance and Economics)

Abstract

By examining the data on 13,663 newly established FDI firms and the environmental regulation reforms between 2000 and 2010, this paper studies whether foreign investors in China exhibit pollution haven behavior. Our analyses indicate that fewer FDI firms locate in provinces with more stringent environmental regulations (i.e., with higher pollution levy rates). Consistent results are found when we examine the individual firm’s location choice decision. We further find that firms’ location patterns respond to the changes in environmental regulations. In particular, their pollution haven behavior becomes more significant when the changes bring greater inter-provincial differences in environmental stringency.

Suggested Citation

  • Liguo Lin & Wei Sun, 2016. "Location choice of FDI firms and environmental regulation reforms in China," Journal of Regulatory Economics, Springer, vol. 50(2), pages 207-232, October.
    • Handle: RePEc:kap:regeco:v:50:y:2016:i:2:d:10.1007_s11149-016-9303-9
    DOI: 10.1007/s11149-016-9303-9
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    References listed on IDEAS

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    More about this item

    Keywords

    Location choice; FDI; Environmental regulation; China;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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