Environmental Regulation and Industry Location

25 Pages Posted: 29 Jan 2009 Last revised: 3 Mar 2009

See all articles by Abay Mulatu

Abay Mulatu

University of Manchester; University of Cambridge - MIT Institute

Reyer Gerlagh

Tilburg University - Tilburg University School of Economics and Management

Dan Rigby

University of Manchester - Centre for Agricultural, Food and Resource Economic Studies

Ada Wossink

Univ. of Manchester -- Economics & Wageningen University --Mansholt Graduate School of Social Sciences

Date Written: January 27, 2009

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.

Keywords: Pollution Haven Hypothesis, Comparative Advantage, Industry Location

JEL Classification: O14

Suggested Citation

Mulatu, Abay and Gerlagh, Reyer and Rigby, Dan and Wossink, Ada, Environmental Regulation and Industry Location (January 27, 2009). FEEM Working Paper No. 2.2009. Available at SSRN: https://ssrn.com/abstract=1333648 or http://dx.doi.org/10.2139/ssrn.1333648

Abay Mulatu (Contact Author)

University of Manchester ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

University of Cambridge - MIT Institute ( email )

Cambridge
United Kingdom

Reyer Gerlagh

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Dan Rigby

University of Manchester - Centre for Agricultural, Food and Resource Economic Studies ( email )

Oxford Road
Manchester M13 9PL, M13 9PL
United Kingdom
0161 275 4808 (Phone)

Ada Wossink

Univ. of Manchester -- Economics & Wageningen University --Mansholt Graduate School of Social Sciences

e-mail: ada.wossink@manchester.ac.uk
United Kingdom

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