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Firm Behavior and Pollution in Small Geographies

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  • Dakshina De Silva
  • Robert McComb
  • Anita Schiller
  • Aurelie Slechten

Abstract

We consider the relationship between the location choices of potentially polluting firms and local income. Unlike previous research in the area of economic justice, we distinguish between pollution potential and actual releases of toxic substances in the locality. We explore the relationship between profit maximizing behavior of potentially polluting firms in their choice of both location and expenditures to influence the likelihood of toxic releases and their expected financial costs. We proxy the expenditures on prudential behavior by observing the co-localization of waste remediation activities. Evidence supports the conclusion that firms behave rationally in managing risk of toxic release.

Suggested Citation

  • Dakshina De Silva & Robert McComb & Anita Schiller & Aurelie Slechten, 2019. "Firm Behavior and Pollution in Small Geographies," Working Papers 266151372, Lancaster University Management School, Economics Department.
    • Handle: RePEc:lan:wpaper:266151372
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    Cited by:

    1. De Silva, Dakshina G. & Hubbard, Timothy P. & Schiller, Anita R. & Tsionas, Mike G., 2023. "Estimating outcomes in the presence of endogeneity and measurement error with an application to R&D," The Quarterly Review of Economics and Finance, Elsevier, vol. 88(C), pages 278-294.
    2. Mingyuan Chen & Dakshina De Silva & Aurelie Slechten, 2021. "Director appointments, boardroom networks, and firm environmental performance," Working Papers 332157256, Lancaster University Management School, Economics Department.

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    More about this item

    Keywords

    EKC; Environmental Justice; Agglomeration; Entry and Exit;
    All these keywords.

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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