Environmental Regulation And The Optimal Location Of The Firm Under Uncertainty
This paper examines the optimal location of a competitive firm in response to environmental costs imposed by the abatement investment and taxes when the cost of the environmental regulation varies spatially under uncertainty. It contributes to the literature by incorporating the spatial setting into a risk-averse firm's location decisions in the presence of environmental regulation uncertainty. An increase in the cost of the environmental regulation moves a risk-averse firm closer to the output market. An augmented input or emission tax causes the risk-averse firm to locate closer to the output market. Uncertainty about environmental regulations in the form of the abatement investment and taxes also leads a risk-averse firm to locate closer to the output market, while it does not affect a risk-neutral firm's location decisions. The results have implications for the design and implementations of environmental and other development-related policies.
|Date of creation:||2003|
|Date of revision:|
|Contact details of provider:|| Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202|
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
References listed on IDEAS
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.:
- Martinich, Joseph S. & Hurter, Arthur Jr., 1982. "Price uncertainty and the optimal production-location decision," Regional Science and Urban Economics, Elsevier, vol. 12(4), pages 509-528, November.
- Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September.
- Tim Jeppesen & John A. List & Henk Folmer, 2002.
"Environmental Regulations and New Plant Location Decisions: Evidence from a Meta-Analysis,"
Journal of Regional Science,
Wiley Blackwell, vol. 42(1), pages 19-49.
- Henk Folmer & John List & Tim Jeppesen, 2002. "Environmental Regulations and New Plant Location Decisions: Evidence from a Meta-Analysis," Natural Field Experiments 00511, The Field Experiments Website.
- Batra, Raveendra N & Ullah, Aman, 1974. "Competitive Firm and the Theory of Input Demand under Price Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 537-48, May/June.
- Bommer, Rolf, 1999. "Environmental Policy and Industrial Competitiveness: The Pollution-Haven Hypothesis Reconsidered," Review of International Economics, Wiley Blackwell, vol. 7(2), pages 342-55, May.
- Motta, Massimo & Thisse, Jacques-Francois, 1994. "Does environmental dumping lead to delocation?," European Economic Review, Elsevier, vol. 38(3-4), pages 563-576, April.
- Song-ken Hsu & Lin-ti Tan, 2001. "Production location choice and risk aversion," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 35(2), pages 239-248.
- Markusen, James R., 1997.
"Costly pollution abatement, competitiveness and plant location decisions,"
Resource and Energy Economics,
Elsevier, vol. 19(4), pages 299-320, November.
- James R. Markusen, 1996. "Costly Pollution Abatement, Competitiveness, and Plant Location Decisions," NBER Working Papers 5490, National Bureau of Economic Research, Inc.
- Markusen, James R., 1995. "Costly pollution abatement, competitiveness, and plant location decisions," Discussion Papers, Series II 260, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
- Katz, Eliakim, 1984. "The optimal location of the competitive firm under price uncertainty," Journal of Urban Economics, Elsevier, vol. 16(1), pages 65-75, July.
- Murat Isik, 2002. "Resource Management under Production and Output Price Uncertainty: Implications for Environmental Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 557-571.
- Bar-Shira, Ziv & Just, Richard E. & Zilberman, D., 1997.
"Estimation of farmers' risk attitude: an econometric approach,"
Agricultural Economics of Agricultural Economists,
International Association of Agricultural Economists, vol. 17(2-3), December.
- Bar-Shira, Z. & Just, R. E. & Zilberman, D., 1997. "Estimation of farmers' risk attitude: an econometric approach," Agricultural Economics, Blackwell, vol. 17(2-3), pages 211-222, December.
- Bar-Shira, Z. & Just, Richard E. & Zilberman, David, 1994. "Estimation of Farmers' Risk Attitude: An Econometric Approach," Working Papers 197812, University of Maryland, Department of Agricultural and Resource Economics.
- Timothy J. Bartik, 2002. "The Effects of Environmental Regulation on Business Location in the United States," Book chapters authored by Upjohn Institute researchers, in: Wayne B. Gray (ed.), Economic Costs and Consequences of Environmental Regulation, pages 129-151 W.E. Upjohn Institute for Employment Research.
- Hoel, Michael, 1997. " Environmental Policy with Endogenous Plant Locations," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(2), pages 241-59, June.
- Mathur, Vijay K., 1983. "Location theory of the firm under price uncertainty," Regional Science and Urban Economics, Elsevier, vol. 13(3), pages 411-428, August.
- Atanu Saha & C. Richard Shumway & Hovav Talpaz, 1994. "Joint Estimation of Risk Preference Structure and Technology Using Expo-Power Utility," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(2), pages 173-184.
- Murat Isik, 2004. "Incentives for Technology Adoption Under Environmental Policy Uncertainty: Implications for Green Payment Programs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 27(3), pages 247-263, March.
- Douglas M. Larson & Gloria E. Helfand & Brett W. House, 1996. "Second-Best Tax Policies to Reduce Nonpoint Source Pollution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 1108-1117.
- Isik, Murat & Khanna, Madhu, 2002.
"Stochastic Technology, Risk Preferences And Adoption Of Site-Specific Technologies,"
2002 Annual meeting, July 28-31, Long Beach, CA
19858, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Murat Isik & Madhu Khanna, 2003. "Stochastic Technology, Risk Preferences, and Adoption of Site-Specific Technologies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 305-317.
- Briys, Eric & Eeckhoudt, Louis, 1985. "Relative Risk Aversion in Comparative Statics: Comment," American Economic Review, American Economic Association, vol. 75(1), pages 281-83, March.
- Diamond, Peter A. & Stiglitz, Joseph E., 1974. "Increases in risk and in risk aversion," Journal of Economic Theory, Elsevier, vol. 8(3), pages 337-360, July.
When requesting a correction, please mention this item's handle: RePEc:ags:aaea03:22066. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.