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Spatial Heterogeneity in Environmental Regulation Enforcement and the Firm Location Decision among U.S. Counties

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  • Morgan, O. Ashton

    (Appalachian State University)

  • Condliffe, Simon

    (West Chester University)

Abstract

We estimate a negative binomial model with fixed effects to examine the impact of spatial differences in environmental regulation on manufacturing capital flows. Using a newly available data set, we find that stricter air quality standards with respect to ozone deter births of polluting plants, suggesting that heterogeneity in regulatory standards may create a spatial browning process. We also find that spatial differences in environmental regulation do not play a role in the location decision of plants that are not pollution-intensive. Finally, we also examine the effects on capital flows with respect to three other criteria air pollutants regulated under the amendments to the Clean Air Act. We find that births of particulates-intensive manufacturers are deterred by stricter regulation with respect to particulates emissions but the location decisions of plants that emit high levels of carbon monoxide and sulfur dioxide are not significantly affected by increased regulation of the respective criteria pollutant.

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File URL: http://journal.srsa.org/ojs/index.php/RRS/article/view/197/152
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Bibliographic Info

Article provided by Southern Regional Science Association in its journal Review of Regional Studies.

Volume (Year): 39 (2009)
Issue (Month): 3 ()
Pages: 239-52

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Handle: RePEc:rre:publsh:v:39:y:2009:i:3:p:239-52

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Web page: http://www.srsa.org

Related research

Keywords: Air Quality; Environmental Regulation; Firm Location; Pollutant; Polluting; Pollution; Regulation; Spatial;

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References

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  1. Cletus C. Coughlin & Eran Segev, 1997. "Location determinants of new foreign-owned manufacturing plants," Working Papers 1997-018, Federal Reserve Bank of St. Louis.
  2. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 5-29, October.
  3. Virginia D. McConnell & Robert M. Schwab, 1990. "The Impact of Environmental Regulation on Industry Location Decisions: The Motor Vehicle Industry," Land Economics, University of Wisconsin Press, vol. 66(1), pages 67-81.
  4. List John A. & Millimet Daniel L & McHone Warren, 2004. "The Unintended Disincentive in the Clean Air Act," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(2), pages 1-28, February.
  5. 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.
  6. John A. List & Daniel L. Millimet & Per G. Fredriksson & W. Warren McHone, 2003. "Effects of Environmental Regulations on Manufacturing Plant Births: Evidence from a Propensity Score Matching Estimator," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 944-952, November.
  7. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
  8. Timothy J. Bartik, 2002. "The Effects of Environmental Regulation on Business Location in the United States," Book chapters authored by Upjohn Institute researchers, in: Wayne B. Gray (ed.), Economic Costs and Consequences of Environmental Regulation, pages 129-151 W.E. Upjohn Institute for Employment Research.
  9. John A. List & W. Warren McHone, 2000. "Measuring the effects of air quality regulations on "dirty" firm births: Evidence from the neo- and mature-regulatory periods," Papers in Regional Science, Springer, vol. 79(2), pages 177-190.
  10. Carlton, Dennis W, 1983. "The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 440-49, August.
  11. List, John A., 2001. "US county-level determinants of inbound FDI: evidence from a two-step modified count data model," International Journal of Industrial Organization, Elsevier, vol. 19(6), pages 953-973, May.
  12. List, John A. & McHone, W. Warren & Millimet, Daniel L., 2004. "Effects of environmental regulation on foreign and domestic plant births: is there a home field advantage?," Journal of Urban Economics, Elsevier, vol. 56(2), pages 303-326, September.
  13. Henderson, J Vernon, 1996. "Effects of Air Quality Regulation," American Economic Review, American Economic Association, vol. 86(4), pages 789-813, September.
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