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Effects of environmental regulation on foreign and domestic plant births: is there a home field advantage?

  • List, John A.
  • McHone, W. Warren
  • Millimet, Daniel L.

Whether environmental regulations alter capital flows remains a hotly debated issue. This paper uses county-level data to examine the location decisions of domestic and foreign firms in a single empirical model and tests for asymmetries by firm origin in the degree to which capital flows are influenced by environmental standards. We find that while domestic firms are influenced by environmental regulations, foreign firms are not. Since the benefits of foreign investment are well-documented-foreign plants typically provide more jobs and increase local wages by more than domestic plants-this result suggests a double-dividend is available: foreign plants provide an economic stimulus and are not unduly influenced by environmental protections.

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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 56 (2004)
Issue (Month): 2 (September)
Pages: 303-326

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Handle: RePEc:eee:juecon:v:56:y:2004:i:2:p:303-326
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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  1. Bratberg, Espen & Grasdal, Astrid & Risa, Alf Erling, 2002. " Evaluating Social Policy by Experimental and Nonexperimental Methods," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(1), pages 147-171.
  2. Henderson, J. Vernon, 2003. "Marshall's scale economies," Journal of Urban Economics, Elsevier, vol. 53(1), pages 1-28, January.
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  5. 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.
  6. John A. List & W. Warren McHone & Daniel L. Millimet, 2003. "Effects of air quality regulation on the destination choice of relocating plants," Oxford Economic Papers, Oxford University Press, vol. 55(4), pages 657-678, October.
  7. Fredriksson, Per G. & List, John A. & Millimet, Daniel L., 2003. "Bureaucratic corruption, environmental policy and inbound US FDI: theory and evidence," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1407-1430, August.
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  11. Per Fredriksson & John List & Warren McHone & Daniel Millimet, 2003. "Effects of Environmental Regulations on Manufacturing Plant Births: Evidence from a Propensity Score Matching Estimator," Natural Field Experiments 00501, The Field Experiments Website.
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  21. Figueiredo, Octavio & Guimaraes, Paulo & Woodward, Douglas, 2002. "Home-field advantage: location decisions of Portuguese entrepreneurs," Journal of Urban Economics, Elsevier, vol. 52(2), pages 341-361, September.
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  24. John Mullahy, 1997. "Instrumental-Variable Estimation Of Count Data Models: Applications To Models Of Cigarette Smoking Behavior," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 586-593, November.
  25. Figlio, David N. & Blonigen, Bruce A., 2000. "The Effects of Foreign Direct Investment on Local Communities," Journal of Urban Economics, Elsevier, vol. 48(2), pages 338-363, September.
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