Weighing the Relative Importance of Environmental Regulation for Industry Location

Research output: Working paperDiscussion paper

Abstract

This paper analyses empirically the extent to which environmental regulation is an influence on industry location in Europe. Particular focus is given to weighing
environmental regulation vis-à-vis other location determinants, mainly the traditional Heckscher-Ohlin factor endowment forces. The analysis is based on a general empirical trade model that captures the theoretically-emphasized joint role of country and industry characteristics in determining industry location. The model is applied to data on 18 manufacturing industries from 13 European countries. The results indicate that while the oft elusive pollution haven effect can be uncovered, the relative strength of such an effect is smaller than other determinants of industry location. This is interpreted, à la M. Scott Taylor, as finding the pollution haven effect but failing to support the pollution haven
hypothesis.
Original languageEnglish
PublisherUniversity of Manchester
Number of pages28
Volume08/03
Publication statusPublished - 2008

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