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Effects of Air Quality Regulation

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Author Info
Vernon Henderson

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Abstract

This paper investigates the effects of local regulatory effort on ground level ozone air quality and on industrial location. Local regulatory effort varies by annual air quality attainment status and by state attitudes towards the environment. A switch from attainment to non-attainment status induces greater regulatory effort in a county, leading to an improvement in air quality. Air quality readings for ground level ozone improve by 3-8% depending on the exact air quality measure, following a switch to non-attainment status. Pro-environment states, which ceteris paribus, spend relatively more on pollution abatement also have cleaner air. A 1% increase in typical annual state pollution abatement expenditures leads to about a .04% improvement in local ozone readings. Heavily polluting industries show a tendency to move to counties with a record of clean air, where they are less likely to be hassled. A county switching to having a three-year record of attainment experiences a 7-9% growth in the number of heavily polluting establishments. This implies polluting industries are spreading out geographically moving from non- attainment (polluted) areas to attainment (initially less polluted) areas. Finally, for ozone, localities may improve the annual hourly extreme value reading used to measure officially local air quality, without improving measures (mean, medians, medians of daily maximum) of more typical ozone conditions. This occurs by spreading out economic activity over the day to dampen peaks of ozone inducing activity and subsequent daily ozone peaks.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5118.

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Date of creation: May 1995
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Publication status: published as American Economic Review, 1996, 86, pp.789-813.
Handle: RePEc:nbr:nberwo:5118

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Find related papers by JEL classification:
H00 - Public Economics - - General - - - General
Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

References listed on IDEAS
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  1. J. Vernon Henderson, 1994. "Externalities and Industrial Development," NBER Working Papers 4730, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Blackwell Publishing, vol. 47(1), pages 225-38, January. [Downloadable!] (restricted)
  3. Scott E. Atkinson & T. H. Tietenberg, 1987. "Economic Implications of Emissions Trading Rules for Local and Regional Pollutants," Canadian Journal of Economics, Canadian Economics Association, vol. 20(2), pages 370-86, May. [Downloadable!] (restricted)
  4. Wayne B Gray & Ronald J Shadbegian, 1993. "Environmental Regulation And Manufacturing Productivity At The Plant Level," Working Papers 93-6, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Randy A Becker & Vernon Henderson, 1999. "Costs of Air Quality Regulation," Working Papers 99-9, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
    Other versions:
  2. Wayne B Gray, 1997. "Manufacturing Plant Location: Does State Pollution Regulation Matter?," Working Papers 97-8, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
    Other versions:
  3. Paroma Sanyal, 2005. "Powering a Green Progress: The Effect of Electricity Deregulation on Environmental Research," Industrial Organization 0504015, EconWPA. [Downloadable!]
  4. Dean, Judith M. & Lovely, Mary E. & Wang, Hua, 2005. "Are foreign investors attracted to weak environmental regulations? Evaluating the evidence from China," Policy Research Working Paper Series 3505, The World Bank. [Downloadable!]
  5. Catherine Y. Co & John A. List, 2004. "Is foreign direct investment attracted to 'knowledge creators'?," Applied Economics, Taylor and Francis Journals, vol. 36(11), pages 1143-1149, June. [Downloadable!] (restricted)
  6. Randy Becker, 2001. "Air Pollution Abatement Costs Under the Clean Air Act: Evidence from the PACE Survey," Working Papers 01-12, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
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  7. Casey Mulligan & Tomas Philipson, . "Merit Motives and Government Intervention: Public Finance in Reverse," University of Chicago - Population Research Center 2000-03, Chicago - Population Research Center. [Downloadable!]
    Other versions:
  8. Oates, Wallace, 2001. "A Reconsideration of Environmental Federalism," Discussion Papers dp-01-54, Resources For the Future. [Downloadable!]
  9. Mitch Kunce & Shelby Gerking & William Morgan, 2002. "Effects of Environmental and Land Use Regulation in the Oil and Gas Industry Using the Wyoming Checkerboard as an Experimental Design," American Economic Review, American Economic Association, vol. 92(5), pages 1588-1593, December. [Downloadable!] (restricted)
  10. Wolfgang Keller & Arik Levinson, 1999. "Environmental Compliance Costs and Foreign Direct Investment Inflows to U.S. States," NBER Working Papers 7369, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Hilary Sigman, 2002. "International Spillovers and Water Quality in Rivers: Do Countries Free Ride?," American Economic Review, American Economic Association, vol. 92(4), pages 1152-1159, September. [Downloadable!] (restricted)
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  12. Randy Becker, 2003. "Pollution Abatement Expenditure by U.S. Manufacturing Plants: Do Community Characteristics Matter?," Working Papers 03-18, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
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  13. Powell, Mark, 1997. "Three-City Air Study," Discussion Papers dp-97-29, Resources For the Future. [Downloadable!]
  14. Shelby Gerking, 1998. "Spatial economic aspects of the environment and environmental policy: New directions for research," ERSA conference papers ersa98p384, European Regional Science Association. [Downloadable!]
  15. A. van der Vlist & Shelby Gerking & Henk Folmer, 2000. "What determines the Success of States in the SBIR Programme?," Tinbergen Institute Discussion Papers 00-096/3, Tinbergen Institute. [Downloadable!]
  16. 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. [Downloadable!]
  17. Wayne B. Gray & Ronald J. Shadbegian, 2002. "When Do Firms Shift Production Across States to Avoid Environmental Regulation?," NBER Working Papers 8705, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  18. Orley Ashenfelter & Lamond Godwin, 1971. "Some Evidence on the Effect of Unionism on the Average Wage of Black Workers Relative to White Workers, 1900-1967," Working Papers 408, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  19. Smith, V. Kerry & Mansfield, Carol & Schwabe, Kurt, 1997. "Does Nature Limit Environmental Federalism?," Discussion Papers dp-97-30, Resources For the Future. [Downloadable!]
  20. Wolfgang,O., 2001. "Cost-effective abatement of ground-level ozone in cities and for larger regions : implications of non-monotonicity," Memorandum 30/2001, Oslo University, Department of Economics. [Downloadable!]
  21. Ronald J Shadbegian & Wayne B Gray, 2003. "What Determines Environmental Performance at Paper Mills? The Roles of Abatement Spending, Regulation, and Efficiency," Working Papers 03-10, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
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  22. Michael Greenstone, 1998. "The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufacturers," Working Papers 787, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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