Emission Leakage: Evidence from the US Multi-plant Firms
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This paper seeks to examine the role of multi-plant’s network to determine their affiliated
plants’ emissions in response to tightened environmental regulations. Polluting
plants, which are located across the nation and are exposed to regional environmental
pressures, form a network through their affiliated parent company. We investigate
whether or not these multi-plant firms, to avoid local environmental compliance, shift
pollution emissions from their affiliated plants in regulated counties to those in unregulated
ones, thereby leading to emissions leakage. We compile a unique detailed
plant-level dataset that pertains to the U.S. manufacturing industry over the period
1990-2008. Taking advantage of the spatial and temporal variations of designated nonattaintment
status at county level, we seek to identify the effects of multi-plant firms’
network on annual changes in emissions of affiliated plants residing in regulated areas
as compared with those in unregulated areas.