IDEAS home Printed from https://ideas.repec.org/p/lan/wpaper/266151372.html
   My bibliography  Save this paper

Firm Behavior and Pollution in Small Geographies

Author

Listed:
  • Dakshina De Silva
  • Robert McComb
  • Anita Schiller
  • Aurelie Slechten

Abstract

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.

Suggested Citation

  • Dakshina De Silva & Robert McComb & Anita Schiller & Aurelie Slechten, 2019. "Firm Behavior and Pollution in Small Geographies," Working Papers 266151372, Lancaster University Management School, Economics Department.
    • Handle: RePEc:lan:wpaper:266151372
    as

    Download full text from publisher

    File URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/LancasterWP2019_011.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. John A. List & W. Warren McHone & Daniel L. Millimet, 2003. "Effects of air quality regulation on the destination choice of relocating plants," Oxford Economic Papers, Oxford University Press, vol. 55(4), pages 657-678, October.
    2. Gourieroux, Christian & Monfort, Alain & Trognon, Alain, 1984. "Pseudo Maximum Likelihood Methods: Applications to Poisson Models," Econometrica, Econometric Society, vol. 52(3), pages 701-720, May.
    3. William T. Harbaugh & Arik Levinson & David Molloy Wilson, 2002. "Reexamining The Empirical Evidence For An Environmental Kuznets Curve," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 541-551, August.
    4. Mastromonaco, Ralph, 2015. "Do environmental right-to-know laws affect markets? Capitalization of information in the toxic release inventory," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 54-70.
    5. Combes, Pierre-Philippe, 2000. "Economic Structure and Local Growth: France, 1984-1993," Journal of Urban Economics, Elsevier, vol. 47(3), pages 329-355, May.
    6. Stern, David I., 2004. "The Rise and Fall of the Environmental Kuznets Curve," World Development, Elsevier, vol. 32(8), pages 1419-1439, August.
    7. Brooks, Nancy & Sethi, Rajiv, 1997. "The Distribution of Pollution: Community Characteristics and Exposure to Air Toxics," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 233-250, February.
    8. Madhu Khanna & George Deltas & Donna Harrington, 2009. "Adoption of Pollution Prevention Techniques: The Role of Management Systems and Regulatory Pressures," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 44(1), pages 85-106, September.
    9. Guerrieri, Veronica & Hartley, Daniel & Hurst, Erik, 2013. "Endogenous gentrification and housing price dynamics," Journal of Public Economics, Elsevier, vol. 100(C), pages 45-60.
    10. Santos Silva, J.M.C. & Tenreyro, Silvana, 2011. "Further simulation evidence on the performance of the Poisson pseudo-maximum likelihood estimator," Economics Letters, Elsevier, vol. 112(2), pages 220-222, August.
    11. Stuart S. Rosenthal & William C. Strange, 2003. "Geography, Industrial Organization, and Agglomeration," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 377-393, May.
    12. Gamper-Rabindran, Shanti, 2006. "Did the EPA's voluntary industrial toxics program reduce emissions? A GIS analysis of distributional impacts and by-media analysis of substitution," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 391-410, July.
    13. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    14. Henderson, Vernon & Kuncoro, Ari & Turner, Matt, 1995. "Industrial Development in Cities," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1067-1090, October.
    15. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 5-29, October.
    16. Gene M. Grossman & Alan B. Krueger, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 353-377.
    17. Wolverton Ann, 2009. "Effects of Socio-Economic and Input-Related Factors on Polluting Plants' Location Decisions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-32, March.
    18. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-632, Nov.-Dec..
    19. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    20. List, John A. & Co, Catherine Y., 2000. "The Effects of Environmental Regulations on Foreign Direct Investment," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 1-20, July.
    21. Seema Arora & Timothy N. Cason, 1999. "Do Community Characteristics Influence Environmental Outcomes? Evidence from the Toxics Release Inventory," Southern Economic Journal, John Wiley & Sons, vol. 65(4), pages 691-716, April.
    22. Wolfgang Keller & Arik Levinson, 2002. "Pollution Abatement Costs and Foreign Direct Investment Inflows to U.S. States," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 691-703, November.
    23. Abdoul Sam, 2010. "Impact of government-sponsored pollution prevention practices on environmental compliance and enforcement: evidence from a sample of US manufacturing facilities," Journal of Regulatory Economics, Springer, vol. 37(3), pages 266-286, June.
    24. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-1152, December.
      • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
      • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
    25. Janet Currie & Johannes F. Schmieder, 2009. "Fetal Exposures to Toxic Releases and Infant Health," American Economic Review, American Economic Association, vol. 99(2), pages 177-183, May.
    26. Brett Baden & Douglas Noonan & Rama Mohana Turaga, 2007. "Scales of justice: Is there a geographic bias in environmental equity analysis?," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 50(2), pages 163-185.
    27. Donna Ramirez Harrington, 2013. "Effectiveness Of State Pollution Prevention Programs And Policies," Contemporary Economic Policy, Western Economic Association International, vol. 31(2), pages 255-278, April.
    28. James T. Hamilton, 1995. "Testing for environmental racism: Prejudice, profits, political power?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 14(1), pages 107-132.
    29. Janet Currie & Lucas Davis & Michael Greenstone & Reed Walker, 2015. "Environmental Health Risks and Housing Values: Evidence from 1,600 Toxic Plant Openings and Closings," American Economic Review, American Economic Association, vol. 105(2), pages 678-709, February.
    30. Scott Marchi & James Hamilton, 2006. "Assessing the Accuracy of Self-Reported Data: an Evaluation of the Toxics Release Inventory," Journal of Risk and Uncertainty, Springer, vol. 32(1), pages 57-76, January.
    31. Brooks Depro & Christopher Timmins & Maggie O'Neil, 2015. "White Flight and Coming to the Nuisance: Can Residential Mobility Explain Environmental Injustice?," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(3), pages 439-468.
    32. H. Spencer Banzhaf & Randall P. Walsh, 2008. "Do People Vote with Their Feet? An Empirical Test of Tiebout," American Economic Review, American Economic Association, vol. 98(3), pages 843-863, June.
    33. Earnhart, Dietrich, 2004. "Regulatory factors shaping environmental performance at publicly-owned treatment plants," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 655-681, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. De Silva, Dakshina G. & Hubbard, Timothy P. & Schiller, Anita R. & Tsionas, Mike G., 2023. "Estimating outcomes in the presence of endogeneity and measurement error with an application to R&D," The Quarterly Review of Economics and Finance, Elsevier, vol. 88(C), pages 278-294.
    2. Philip M. Iannaccone & Rebecca J. Ryznar & Lon J. Van Winkle, 2024. "Genetics, Epigenetics, and the Environment: Are Precision Medicine, Provider Compassion, and Social Justice Effective Public Health Measures to Mitigate Disease Risk and Severity?," IJERPH, MDPI, vol. 21(11), pages 1-17, November.
    3. Mingyuan Chen & Dakshina De Silva & Aurelie Slechten, 2021. "Director appointments, boardroom networks, and firm environmental performance," Working Papers 332157256, Lancaster University Management School, Economics Department.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chakraborti, Lopamudra & Shimshack, Jay P., 2022. "Environmental disparities in urban Mexico: Evidence from toxic water pollution," Resource and Energy Economics, Elsevier, vol. 67(C).
    2. Dakshina G. De Silva & Timothy P. Hubbard & Robert P. McComb & Anita R. Schiller, 2017. "Entry, growth and survival in the green industry," Regional Studies, Taylor & Francis Journals, vol. 51(12), pages 1774-1785, December.
    3. Banzhaf, H. Spencer, 2011. "The Political Economy of Environmental Justice," MPRA Paper 101191, University Library of Munich, Germany.
    4. Harrington, Donna Ramirez, 2012. "Two-stage adoption of different types of pollution prevention (P2) activities," Resource and Energy Economics, Elsevier, vol. 34(3), pages 349-373.
    5. Hausman, Catherine & Stolper, Samuel, 2021. "Inequality, information failures, and air pollution," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    6. Wang, Xiao & Deltas, George & Khanna, Madhu & Bi, Xiang, 2017. "Community Pressure and the Relocation of Toxic Facilities," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258390, Agricultural and Applied Economics Association.
    7. Germani, Anna Rita & Morone, Piergiuseppe & Testa, Giuseppina, 2014. "Environmental justice and air pollution: A case study on Italian provinces," Ecological Economics, Elsevier, vol. 106(C), pages 69-82.
    8. Ann Wolverton, 2009. "The Role of Demographic and Cost-Related Factors in Determining Where Plants Locate - A Tale of Two Texas Cities," NCEE Working Paper Series 200903, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Jun 2009.
    9. Jeremy G. Moulton & Nicholas J. Sanders & Scott A. Wentland, 2024. "Toxic Assets: How the Housing Market Responds to Environmental Information Shocks," Land Economics, University of Wisconsin Press, vol. 100(1), pages 66-88.
    10. Garrone, Paola & Groppi, Angelamaria, 2012. "Siting locally-unwanted facilities: What can be learnt from the location of Italian power plants," Energy Policy, Elsevier, vol. 45(C), pages 176-186.
    11. Wolverton Ann, 2009. "Effects of Socio-Economic and Input-Related Factors on Polluting Plants' Location Decisions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-32, March.
    12. Dakshina G. Silva & Anita R. Schiller & Aurélie Slechten & Leonard Wolk, 2024. "Tiebout Sorting and Toxic Releases," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(9), pages 2487-2520, September.
    13. Emanuela Marrocu & Raffaele Paci & Stefano Usai, 2013. "Productivity Growth In The Old And New Europe: The Role Of Agglomeration Externalities," Journal of Regional Science, Wiley Blackwell, vol. 53(3), pages 418-442, August.
    14. Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2011. "Spatial concentration and plant-level productivity in France," Journal of Urban Economics, Elsevier, vol. 69(2), pages 182-195, March.
    15. Cui, Jingbo & Moschini, GianCarlo, 2020. "Firm internal network, environmental regulation, and plant death," Journal of Environmental Economics and Management, Elsevier, vol. 101(C).
    16. Jordi Jofre-Monseny & Raquel Marín-López & Elisabet Viladecans-Marsal, 2012. "What underlies localization and urbanization economies? Evidence from the location of new firms," Working Papers 2012/9, Institut d'Economia de Barcelona (IEB).
    17. Henri L.F. de Groot & Jacques Poot & Martijn J. Smit, 2007. "Agglomeration, Innovation and Regional Development: Theoretical Perspectives and Meta-Analysis," Tinbergen Institute Discussion Papers 07-079/3, Tinbergen Institute.
    18. Hanlon, W. Walker & Miscio, Antonio, 2017. "Agglomeration: A long-run panel data approach," Journal of Urban Economics, Elsevier, vol. 99(C), pages 1-14.
    19. Martijn J. Burger & Frank G. Oort & Otto Raspe, 2011. "Agglomeration and New Establishment Survival: A Mixed Hierarchical and Cross-Classified Model," Advances in Spatial Science, in: Karima Kourtit & Peter Nijkamp & Roger R. Stough (ed.), Drivers of Innovation, Entrepreneurship and Regional Dynamics, pages 45-63, Springer.
    20. Cory, Dennis C. & Rahman, Tauhidur, 2009. "Environmental justice and enforcement of the safe drinking water act: The Arizona arsenic experience," Ecological Economics, Elsevier, vol. 68(6), pages 1825-1837, April.

    More about this item

    Keywords

    EKC; Environmental Justice; Agglomeration; Entry and Exit;
    All these keywords.

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lan:wpaper:266151372. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Giorgio Motta (email available below). General contact details of provider: https://edirc.repec.org/data/delanuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.