The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Pollution Haven Hypothesis

  • Arik Levinson
Reference work entry


The pollution haven hypothesis, or pollution haven effect, is the idea that polluting industries will relocate to jurisdictions with less stringent environmental regulations. Empirical studies of the phenomenon have been hampered by the difficulty of measuring regulatory stringency and by the fact that stringency and pollution are determined simultaneously. Early studies based on cross sections of data found no significant effect of regulations on industry locations. Newer studies that use panels of data to control for unobserved heterogeneity or instrumental variables to account for simultaneity have found statistically significant, reasonably sized effects.


Environmental regulations Fixed-effects models Free trade Heckscher–Ohlin trade theory Inter-jurisdictional competition Not in my backyard (NIMBY) Pollution abatement costs and expenditures Pollution haven hypothesis Porter hypothesis Protectionism Race to the bottom Regulatory stringency Tariffs Unobserved heterogeneity 

JEL Classifications

F1 F2 H73 Q5 
This is a preview of subscription content, log in to check access.


  1. Becker, R., and J. Henderson. 2000. Effects of air quality regulations on polluting industries. Journal of Political Economy 108: 379–421.CrossRefGoogle Scholar
  2. Brunnermeier, S., and A. Levinson. 2004. Examining the evidence on environmental regulations and industry location. Journal of Environment & Development 13: 6–41.CrossRefGoogle Scholar
  3. Copeland, B., and M. Taylor. 2004. Trade, growth, and the environment. Journal of Economic Literature 42: 7–71.CrossRefGoogle Scholar
  4. Ederington, J., Levinson, A., and Minier, J. 2004. Trade liberalization and pollution havens. Advances in Economic Analysis & Policy 4(2) Article 6. Berkeley Electronic Press.Google Scholar
  5. Greenstone, M. 2002. The impacts of environmental regulations on industrial activity: Evidence from the 1970 and 1977 Clean Air Act amendments and Census of Manufactures. Journal of Political Economy 110: 1175–1219.CrossRefGoogle Scholar
  6. Jaffe, A., S. Peterson, P. Portney, and R. Stavins. 1995. Environmental regulations and the competitiveness of US manufacturing: What does the evidence tell us? Journal of Economic Literature 33: 132–163.Google Scholar
  7. Levinson, A. 2003. Environmental regulatory competition: A status report and some new evidence. National Tax Journal 56: 91–106.CrossRefGoogle Scholar
  8. Porter, M., and C. van der Linde. 1995. Toward a new conception of the environment–competitiveness relationship. Journal of Economic Perspectives 9(4): 97–118.CrossRefGoogle Scholar
  9. U.S. Census Bureau. Various years. Pollution abatement costs and expenditures, MA200. Washington, DC: U.S. Government Printing Office.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Arik Levinson
    • 1
  1. 1.