Abstract
This research examines the effects of the 1977 Clean Air Act Amendments (CAAA) on the location decisions of pollution-intensive manufacturing plants. We develop a panel data set to analyze plant births of polluting manufacturers over time as a function county-level attainment status of the federal standard for ozone pollution. We find that more stringent county-level environmental regulations impact pollution-intensive capital flows through deterring new plant births. We also find that the impact of stricter regulations varies by pollution-intensity of manufacturers, with results suggesting that federal guidelines have a greater impact on high pollution intensive manufacturers than more moderate polluters.
Similar content being viewed by others
References
Bartik, T. J. (1988). The effects of environmental regulation on business location in the United States. Growth and Change, (Summer), 22–44.
Becker R., Henderson J.V. (2000) Effects of air quality regulation on polluting industries. Journal of Political Economy 108: 379–421
Duffo-Deno K.T. (1992) Pollution abatement expenditures and regional manufacturing activity. Journal of Regional Science 32(4): 419–436
Gamper-Rabindran S. (2006) NAFTA and the environment: What can the data tell us? . Economic Development and Cultural Change 54(3): 605–633
Gray, W. B. (1997). Manufacturing plant location: Does state pollution regulation matter? Working Paper No. W5880, National Bureau of Economic Research.
Hausman J., Hall B.H., Griliches Z. (1984) Econometric models for count data with an application to the patents-R&D relationship. Econometrica 52: 909–938
Henderson J.V. (1996) Effects of air quality regulation. American Economic Review 86: 789–813
Henderson J., Vernon K.A., Turner M. (1995) Industrial development in cities. Journal of Political Economy 103: 1067–1090
Jeppesen T., List J., Folmer H. (2002) Environmental regulations and new plant location decisions: Evidence from a meta-analysis. Journal of Regional Science 42(1): 19–49
Kahn M. (1997) Particulate pollution trends in the United States. Regional Science and Urban Economics 27: 87–107
Keller, W., & Levinson, A. (1999). Environmental regulations and FDI inflows to U.S. states: The Potential for a ‘Race to the Bottom’ of environmental stringency. Paper prepared for the ISIT99 Conference, June 4–5.
Levinson A. (1996) Environmental regulations and manufacturer’s location choices: Evidence from the census of manufacturers. Journal of Public Economics 61(1): 5–29
List J. (2001) U.S. County-level determinants of inbound FDI: Evidence from a two-step modified count data model. International Journal of Industrial Organization 19: 953–973
List J., Mason C.F. (2001) Optimal institutional arrangements for pollution control: Evidence from a differential game with asymmetric players. Journal of Environmental Economics and Management 42(3): 277–296
List J., McHone W. (2000) Measuring the effects of air quality regulations on “Dirty” firm births: Evidence from the Neo- and mature-regulatory periods. Papers in Regional Science 79(2): 177–190
List J., McHone W., Millimet D. (2004) Effects of environmental regulation on foreign and domestic plant births: Is there home filed advantage?. Journal of Urban Economics 56(2): 303–326
List, J., McHone, W., Lee, J., & Soskin, M. (1999). Effects of air quality regulation on manufacturing births: Evidence from a panel of counties in New York state. Working paper, AREC, University of Maryland.
McConnell V.D., Schwab R.M. (1990) The impact of environmental regulation on industry location decisions: The motor vehicle industry. Land Economics 66(1): 67–81
Wooldridge J. (1991) Specification testing and quasi-maximum likelihood estimation. Journal of Econometrics 47: 980–995
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Condliffe, S., Morgan, O. The effects of air quality regulations on the location decisions of pollution-intensive manufacturing plants. J Regul Econ 36, 83–93 (2009). https://doi.org/10.1007/s11149-008-9064-1
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11149-008-9064-1