TY  - JOUR
AU  - Gray,Wayne B.
AU  - Shadbegian,Ronald J.
TI  - When Do Firms Shift Production Across States to Avoid Environmental Regulation?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8705
PY  - 2002
Y2  - January 2002
UR  - http://www.nber.org/papers/w8705
L1  - http://www.nber.org/papers/w8705.pdf
N1  - Author contact info:
Wayne B. Gray
Department of Economics
Clark University
950 Main Street
Worcester, MA 01610
Tel: 508/793-7693
Fax: 508/793-8849
E-Mail: WGRAY@CLARKU.EDU

Ronald Shadbegian
401 South 12th Street
Apt. 2216
Arlington, VA 22202
Tel: 202-566-2280
E-Mail: Shadbegian.Ron@epamail.epa.gov
AB  - This paper takes a new approach to testing the impact of state environmental regulatory stringency on firms' location decisions, focusing on firms' allocation of production across states.  We use Census data for the paper industry to measure the share of each firm's production in each state during 1967-2002.  We use a conditional logit model, controlling for a variety of state characteristics that influence firm costs and revenues, and testing several measures of state environmental stringency.  Firms allocate significantly smaller production shares to states with stricter regulations, but there is significant heterogeneity across firms in their sensitivity to regulatory stringency.  Firms with low compliance rates are more sensitive than firms with high compliance rates, consistent with a model where compliance rates are driven by differences across firms in the costs of compliance, rather than in the benefits of compliance.
ER  -