Firm Behavior and Pollution in Small Geographies
41 Pages Posted: 20 Jun 2019
Date Written: June 12, 2019
We consider the relationship between the location choices of potentially polluting firms and local income. Unlike previous research in the area of economic justice, we distinguish between pollution potential and actual releases of toxic substances in the locality. We explore the relationship between profit maximizing behavior of potentially polluting firms in their choice of both location and expenditures to influence the likelihood of toxic releases and their expected financial costs. We proxy the expenditures on prudential behavior by observing the co-localization of waste remediation activities. Evidence supports the conclusion that firms behave rationally in managing risk of toxic release.
Keywords: Environment and Toxic Release, Profit Maximizing Behavior, Firm Localization, Agglomeration, and Firm Entry
JEL Classification: Q2, L2, R1, R3
Suggested Citation: Suggested Citation