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Environmental Regulation and Industry Location

Author

Listed:
  • Mulatu, Abay
  • Gerlagh, Reyer
  • Rigby, Dan
  • Wossink, Ada
Abstract
This paper estimates the effect of environmental regulation on industry location and compares it with other determinants of location such as agricultural, education and R&D country characteristics. The analysis is based on a general empirical trade model that captures the interaction between country and industry characteristics in determining industry location. The Johnson-Neyman technique is used to fully explicate the nature of the conditional interactions. The model is applied to data on 16 manufacturing industries from 13 European countries. The empirical results indicate that the pollution haven effect is present and that the relative strength of such an effect is of about the same magnitude as other determinants of industry location. A significant negative effect on industry location is observed only at relatively high levels of industry pollution intensity.

Suggested Citation

  • Mulatu, Abay & Gerlagh, Reyer & Rigby, Dan & Wossink, Ada, 2009. "Environmental Regulation and Industry Location," Economic Theory and Applications Working Papers 47176, Fondazione Eni Enrico Mattei (FEEM).
  • Handle: RePEc:ags:feemet:47176
    DOI: 10.22004/ag.econ.47176
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    References listed on IDEAS

    as
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    Cited by:

    1. Edward Manderson & Richard Kneller, 2012. "Environmental Regulations, Outward FDI and Heterogeneous Firms: Are Countries Used as Pollution Havens?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(3), pages 317-352, March.
    2. Franco Ruzzenenti & Andreas Joseph & Elisa Ticci & Pietro Vozzella & Giampaolo Gabbi, 2015. "Interactions between Financial and Environmental Networks in OECD Countries," PLOS ONE, Public Library of Science, vol. 10(9), pages 1-12, September.
    3. Mulder, Peter & de Groot, Henri L.F., 2013. "Dutch sectoral energy intensity developments in international perspective, 1987–2005," Energy Policy, Elsevier, vol. 52(C), pages 501-512.
    4. Medalla, Erlinda M. & Lazaro, Dorothea C., 2005. "Does Trade Lead to a Race to the Bottom in Environmental Standards? Another Look at the Issues," Discussion Papers DP 2005-23, Philippine Institute for Development Studies.
    5. repec:got:cegedp:65 is not listed on IDEAS
    6. Koetse, Mark J. & de Groot, Henri L.F. & Florax, Raymond J.G.M., 2008. "Capital-energy substitution and shifts in factor demand: A meta-analysis," Energy Economics, Elsevier, vol. 30(5), pages 2236-2251, September.
    7. Millimet, Daniel L., 2013. "Environmental Federalism: A Survey of the Empirical Literature," IZA Discussion Papers 7831, Institute of Labor Economics (IZA).
    8. Stoschek, Barbara, 2007. "The political economy of environmental regulations and industry compensation," University of Göttingen Working Papers in Economics 65, University of Goettingen, Department of Economics.
    9. Sunghoon Chung, 2012. "Environmental Regulation and the Pattern of Outward FDI: An Empirical Assessment of the Pollution Haven Hypothesis," Departmental Working Papers 1203, Southern Methodist University, Department of Economics.
    10. Abay Mulatu, 2008. "Weighing the relative importance of environmental regulation for industry location," Economics Discussion Paper Series 0803, Economics, The University of Manchester.

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    More about this item

    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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