PT  - JOURNAL ARTICLE
AU  - Gray, Wayne B.
AU  - Shadbegian, Ron
TI  - When Do Firms Shift Production Across States to Avoid Environmental Regulation?
AID  - 10.3368/le.100.3.071921-0084R
DP  - 2024 Mar 25
TA  - Land Economics
PG  - 071921-0084R
4099  - http://le.uwpress.org/content/early/2024/03/19/le.100.3.071921-0084R.short
4100  - http://le.uwpress.org/content/early/2024/03/19/le.100.3.071921-0084R.full
AB  - This paper tests the impact of state environmental regulatory stringency on firms’ allocation of production across states, using plant-level Census data for the paper industry during 1967-2012. We model the 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 in our theoretical model when firms’ compliance decisions are affected more by differences across their costs (rather than their benefits) of compliance.