Firm behavior and pollution in small geographies

Dakshina G.De Silva, Robert P. McComb, Anita R. Schiller, Aurelie Slechten

Research output: Contribution to journalArticlepeer-review

Abstract

We consider the relationship between the location choices of potentially polluting firms and local income. Unlike previous research in the area of environmental justice, we distinguish between pollution potential and actual releases of toxic substances in the locality. We explore the relationship between the profit maximizing behavior of potentially polluting firms in their choice of both location and expenditures to influence the likelihood of toxic releases and their expected financial costs. We proxy the expenditures on prudential behavior by observing the co-localization of waste remediation activities. Evidence supports the conclusion that firms behave rationally in managing risk of toxic release, which may result in disparities in exposure to toxic releases faced by certain population groups.

Original languageEnglish
Article number103742
JournalEuropean Economic Review
Volume136
DOIs
StatePublished - Jul 2021

Keywords

  • And firm entry
  • Environment and toxic release
  • Firm localization
  • Profit maximizing behavior
  • Waste management

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