Journal of Regulatory Economics

, Volume 50, Issue 2, pp 207–232 | Cite as

Location choice of FDI firms and environmental regulation reforms in China

Original Article


By examining the data on 13,663 newly established FDI firms and the environmental regulation reforms between 2000 and 2010, this paper studies whether foreign investors in China exhibit pollution haven behavior. Our analyses indicate that fewer FDI firms locate in provinces with more stringent environmental regulations (i.e., with higher pollution levy rates). Consistent results are found when we examine the individual firm’s location choice decision. We further find that firms’ location patterns respond to the changes in environmental regulations. In particular, their pollution haven behavior becomes more significant when the changes bring greater inter-provincial differences in environmental stringency.


Location choice FDI Environmental regulation China 

JEL Classification

C33 K32 Q58 



The authors thank the anonymous referees and the editor for their comments and suggestions, which improved the paper. Financial support from EEPSEA, the Key Laboratory of Mathematical Economics (SUFE), and the Innovation Program of Shanghai Municipal Education Commission is also gratefully acknowledged.


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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  1. 1.School of Economics and Institute for Advanced ResearchShanghai University of Finance and EconomicsShanghaiChina
  2. 2.Key Laboratory of Mathematical Economics (SUFE)Ministry of EducationShanghaiChina

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