Effects of environmental regulation on foreign and domestic plant births: is there a home field advantage?

John List, Warren McHone and Daniel Millimet

Natural Field Experiments from The Field Experiments Website

Abstract: Whether environmental regulations alter capital flows remains a hotly debated issue. This paper uses county-level data to examine the location decisions of domestic and foreign firms in a single empirical model and tests for asymmetries by firm origin in the degree to which capital flows are influenced by environmental standards. We find that while domestic firms are influenced by environmental regulations, foreign firms are not. Since the benefits of foreign investment are well-documented-foreign plants typically provide more jobs and increase local wages by more than domestic plants-this result suggests a double-dividend is available: foreign plants provide an economic stimulus and are not unduly influenced by environmental protections.

Date: 2004
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Journal Article: Effects of environmental regulation on foreign and domestic plant births: is there a home field advantage? (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:feb:natura:00492

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