Is There a Pollution Haven Effect? Evidence from a Natural Experiment in China

In this paper, we investigate whether there is a pollution haven effect, specifically, the effect of environmental regulations on firm location. Our identification uses the Two Control Zones (TCZ) policy implemented by the Chinese government in 1998. The difference-in-differences (DID) estimation shows that cities with tougher environmental regulations attract less foreign direct investment (FDI). Specifically, being listed as a TCZ city causes the amount of FDI to drop by 41%. Our results are robust to various robustness checks on the validity of the DID estimation and other estimation concerns

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Year of publication:	2012
Authors:	Lu, Yi ; Wu, Mingqin ; Yu, Linhui
Publisher:	[S.l.] : SSRN
Subject:	China \| Umweltbelastung \| Pollution \| Umweltstandard \| Environmental standard \| Experiment \| Umweltpolitik \| Environmental policy

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