Economics
When Do Firms Shift Production across States to Avoid Environmental Regulation?
Document Type
Article
Abstract
This article tests the impact of state environmental regulatory stringency on firms’ allocation of production across states using plant-level U.S. Census data for the paper industry during 1967–2012. We model firms’ production shares in each state with a conditional logit specification, testing several measures of state regulatory stringency and controlling for other state characteristics. Firms with relatively low compliance rates are more likely to avoid stringent states compared to firms with the highest compliance rates. This is consistent with our theoretical model when firms’compliance decisions are affected more by differences across their costs, rather than their benefits, of compliance.
Publication Title
Land Economics
Publication Date
2024
Volume
100
Issue
3
First Page
443
Last Page
457
ISSN
0023-7639
DOI
10.3368/le.100.3.071921-0084R
Keywords
environmental regulation, regulatory stringency, compliance rates, compliance costs, production
Repository Citation
Gray, Wayne B. and Shadbegian, Ron, "When Do Firms Shift Production across States to Avoid Environmental Regulation?" (2024). Economics. 98.
https://commons.clarku.edu/faculty_economics/98