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Environmental Regulations and the Cleanup of Manufacturing: Plant-Level Evidence

Author

Listed:
  • Nouri Najjar

    (Western University)

  • Jevan Cherniwchan

    (Carleton University)

Abstract

For much of the industrialized world, pollution from manufacturing has been falling despite increased output. We examine how air quality standards---a common environmental regulation---have contributed to this cleanup of manufacturing. We develop a general equilibrium model to show how air quality standards can lead to a cleanup by causing reductions in plant emission intensity, relative changes in plant output, and plant entry and exit. We provide quasi-experimental evidence from Canada to highlight the magnitude of these responses. Our results suggest that air quality standards explain just under 40% of the cleanup of manufacturing.

Suggested Citation

  • Nouri Najjar & Jevan Cherniwchan, 2021. "Environmental Regulations and the Cleanup of Manufacturing: Plant-Level Evidence," The Review of Economics and Statistics, MIT Press, vol. 103(3), pages 476-491, July.
    • Handle: RePEc:tpr:restat:v:103:y:2021:i:3:p:476-491
    DOI: 10.1162/rest_a_00904
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    Cited by:

    1. Leisner, Jonathan & Munch, Jakob R. & Nielsen, August Twile & Schaur, Georg, 2023. "The Impact of Offshoring and Import Competition on Firm-Level Carbon Emissions," IZA Discussion Papers 16556, Institute of Labor Economics (IZA).
    2. Kumbhakar, Subal C. & Badunenko, Oleg & Willox, Michael, 2022. "Do carbon taxes affect economic and environmental efficiency? The case of British Columbia’s manufacturing plants," Energy Economics, Elsevier, vol. 115(C).
    3. Jevan M. Cherniwchan & M. Scott Taylor, 2022. "International Trade and the Environment: Three Remaining Empirical Challenges," NBER Working Papers 30020, National Bureau of Economic Research, Inc.
    4. Li, Zhen & Wu, Baijun & Wang, Danyang & Tang, Maogang, 2022. "Government mandatory energy-biased technological progress and enterprises' environmental performance: Evidence from a quasi-natural experiment of cleaner production standards in China," Energy Policy, Elsevier, vol. 162(C).
    5. Li, Shuo & Wang, Min, 2022. "Environmental Regulation and Firms’ Extensive Margin Decisions," EfD Discussion Paper 22-15, Environment for Development, University of Gothenburg.
    6. Shinsuke Tanaka & Kensuke Teshima & Eric Verhoogen, 2022. "North-South Displacement Effects of Environmental Regulation: The Case of Battery Recycling," American Economic Review: Insights, American Economic Association, vol. 4(3), pages 271-288, September.
    7. Elisa Rottner & Kathrine Graevenitz, 2024. "What Drives Carbon Emissions in German Manufacturing: Scale, Technique or Composition?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(9), pages 2521-2542, September.
    8. Sun, Chuanwang & Tie, Ying & Yu, Lili, 2024. "How to achieve both environmental protection and firm performance improvement: Based on China's carbon emissions trading (CET) policy," Energy Economics, Elsevier, vol. 130(C).
    9. Philippe Kabore & Nicholas Rivers, 2023. "Manufacturing output and extreme temperature: Evidence from Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(1), pages 191-224, February.
    10. Kwon, Ohyun & Zhao, Hao & Zhao, Min Qiang, 2023. "Global firms and emissions: Investigating the dual channels of emissions abatement," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
    11. Claire Brunel & Arik Levinson, 2021. "Globalization and Greenhouse Gas Emissions: Evidence from the United States," NBER Working Papers 28372, National Bureau of Economic Research, Inc.
    12. Choi, Pak-Sing & Espínola-Arredondo, Ana & Muñoz-García, Félix, 2022. "Environmental policy helping antitrust decisions: Socially excessive and insufficient merger approvals," Resource and Energy Economics, Elsevier, vol. 67(C).
    13. Filippo Belloc & Edilio Valentini, 2021. "Digging into Environmental Productivity: Is It All about Technology?," Department of Economics University of Siena 857, Department of Economics, University of Siena.
    14. Felipe Avilés-Lucero & Gabriel Peraita & Camilo Valladares, 2023. "CO2 mitigation from a national accounts’ perspect," Economic Statistics Series 140, Central Bank of Chile.
    15. Inma Martínez-Zarzoso & Shampa Roy-Mukherjee & Finn-Ole Semrau & Anca M. Voicu, 2020. "Pollution Reduction by Rationalization in Indian Firms," Working Papers 2020.01, International Network for Economic Research - INFER.
    16. Siewers, Samuel & Martínez-Zarzoso, Inmaculada & Baghdadi, Leila, 2024. "Global value chains and firms’ environmental performance," World Development, Elsevier, vol. 173(C).
    17. Choi, Jaerim & Hyun, Jay & Kim, Gueyon & Park, Ziho, 2023. "Trade Policy Uncertainty, Offshoring, and the Environment: Evidence from US Manufacturing Establishments," IZA Discussion Papers 15919, Institute of Labor Economics (IZA).
    18. Younes Ahmadi & Akio Yamazaki & Philippe Kabore, 2022. "How Do Carbon Taxes Affect Emissions? Plant-Level Evidence from Manufacturing," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(2), pages 285-325, June.

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