Spatial Heterogeneity in Environmental Regulation Enforcement and the Firm Location Decision among U.S. Counties

We estimate a negative binomial model with fixed effects to examine the impact of spatial differences in environmental regulation on manufacturing capital flows. Using a newly available data set, we find that stricter air quality standards deter births of polluting plants, suggesting heterogeneity in regulatory standards may create a temporal browning process. We also find that spatial differences in environmental regulation do not play a role in the location decision of non-pollution intensive plants. Key Words: Environmental regulation, firm location, air pollution