Do Health Risks Shape the Ownership of Polluting Assets?

Abstract

This paper examines whether health risks shape polluting activities and the ownership of polluting assets. I exploit the variation in perceived health risks created by the US Report on Carcinogens, which recognizes cancer risks posed by chemicals. When a chemical is recognized as a carcinogen, aggregate pollution levels remain unaffected, but pollution-based market concentration increases. While individual firms lower pollution levels and pollution capacity, the largest polluters acquire assets and scale up polluting activities. Additional analyses suggest that these corporate responses represent a reallocation of litigation risk across firms, which benefit shareholders but fail to deter chemical pollution.

Note:
Funding declaration: There is no external funding tied to the project

Conflict of Interests: there is no competing interest

Keywords: JEL Classification: G31, G34, Q53 Health risk, litigation risk, production capacity, asset transactions

JEL Classification: G31,G34,Q53