Environmental and Resource Economics

, Volume 45, Issue 4, pp 459–479 | Cite as

Environmental Regulation and Industry Location in Europe

  • Abay MulatuEmail author
  • Reyer Gerlagh
  • Dan Rigby
  • Ada Wossink
Open Access


This paper estimates the effect of environmental regulation on industry location and compares it with other determinants of location such as agricultural, education and R&D country characteristics. The analysis is based on a general empirical trade model that captures the interaction between country and industry characteristics in determining industry location. The Johnson–Neyman technique is used to fully explicate the nature of the conditional interactions. The model is applied to data on 16 manufacturing industries from 13 European countries. The empirical results indicate that the pollution haven effect is present and that the relative strength of such an effect is of about the same magnitude as other determinants of industry location. A significant negative effect on industry location is observed only at relatively high levels of industry pollution intensity.


Pollution haven hypothesis Comparative advantage Industry location 


Open Access

This article is distributed under the terms of the Creative Commons Attribution Noncommercial License which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.


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Copyright information

© The Author(s) 2009

Open AccessThis is an open access article distributed under the terms of the Creative Commons Attribution Noncommercial License (, which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.

Authors and Affiliations

  • Abay Mulatu
    • 1
    Email author
  • Reyer Gerlagh
    • 2
    • 3
  • Dan Rigby
    • 2
  • Ada Wossink
    • 2
  1. 1.Economics, LMBSLondon Metropolitan UniversityLondonUK
  2. 2.Economics, School of Social SciencesUniversity of ManchesterManchesterUK
  3. 3.Tilburg UniversityTilburgThe Netherlands

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