RT Journal Article
SR Electronic
T1 When Do Firms Shift Production Across States to Avoid Environmental Regulation?
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 071921-0084R
DO 10.3368/le.100.3.071921-0084R
A1 Gray, Wayne B.
A1 Shadbegian, Ron
YR 2024
UL http://le.uwpress.org/content/early/2024/03/19/le.100.3.071921-0084R.abstract
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.