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The confusing relationship between environmental policy and location behaviour of firms: A methodological review of selected case studies

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  • Tim Jeppesen
  • Henk Folmer

Abstract

The literature on the effects of environmental policy on the location behaviour of firms has so far failed to draw any firm conclusions. Different studies have shown that the effects may be zero, negative or positive. They always tend to be small. This paper argues that methodological issues form a major explanation for the contradictory results. It discusses the methodological strengths and weaknesses of data collection and secondary data analysis. Moreover, several typical studies are reviewed both in terms of methodology and findings. The paper finds that methodological issues tend to affect the results. The main substantive result is that at the present intensity of environmental policy plant closing is most likely to result, followed by reduced location of new firms whereas relocation is the least likely response. The results have to be interpreted with caution, however, because of methodological problems inherent to most studies. Copyright Springer-Verlag Berlin Heidelberg 2001

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File URL: http://hdl.handle.net/10.1007/s001680100055
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Bibliographic Info

Article provided by Springer in its journal The Annals of Regional Science.

Volume (Year): 35 (2001)
Issue (Month): 4 (December)
Pages: 523-546

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Handle: RePEc:spr:anresc:v:35:y:2001:i:4:p:523-546

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Related research

Keywords: JEL classifications: B41; C51; D21; Q28; R38;

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Cited by:
  1. Henk Folmer, 2009. "OPEC versus Kyoto by Henk Folmer," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 10(3), pages 23-29, October.
  2. T. Verbeke & M. De Clercq, 2003. "Environmental policy uncertainty, policy coordination and relocation decisions," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/208, Ghent University, Faculty of Economics and Business Administration.

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