Measuring the effects of air quality regulations on "dirty" firm births: Evidence from the neo- and mature-regulatory periods

In this article, we use annual (1980-90) county-level manufacturing plant location data for New York State to examine the effects of the 1977 Clean Air Act Amendments on the location decisions of new pollution-intensive manufacturing plants in the "neo-regulatory" (1980-84) and "mature-regulatory" (1985-90) phases of the Act's implementation. Our results suggest that the temporal effects of regulation vary. Whereas the location decisions of pollution intensive manufacturing firms were unaffected by the Act's regulatory restrictions in the "neo-regulatory" period, the restrictions appear to have had a significant negative impact on the location decisions of these types of firms in the Act's "mature-regulatory" phase. The diversion of new pollution intensive plants to counties with less stringent environmental regulations suggests that current US environmental regulations may be leading to a "browning process" whereby counties historically free of pollution become havens fur polluters, JEL classification: Q28, R38, R30.