Firm Presence, Pollution, and Agglomeration: Evidence from a Randomized Environmental Place-Based Policy

Michael Gechter and Namrata Kala

No 33707, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Firm location decisions impose externalities on other firms due to competitive or agglomerative forces, and on the environment. We study an environmental place-based policy that randomly moved 20,000 firms in New Delhi. Relocation reduces pollution, but firm exit increases. We combine the exogenous assignment of firms to industrial plots with a model to estimate spillovers on neighboring firms, showing that firm survival rates could have been increased by allocating firms to plots accounting for input-output linkages. These results provide causal evidence on how firm presence impacts environmental quality, and how spillovers can be used to minimize costs on regulated firms.

JEL-codes: D22 L20 O10 Q52 Q53 Q56 Q58 R38 (search for similar items in EconPapers)
Date: 2025-04
New Economics Papers: this item is included in nep-bec, nep-ene, nep-env, nep-geo, nep-sbm and nep-ure
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