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Environmental Regulations and Plant Exit

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Abstract

A qualitative response model is applied to study the relationship between environmental regulations and plant exit. The data set is Norwegian panel data for establishments in three manufacturing sectors that have high shares of units which have been under strict environmental regulations. In two of the sectors, the estimated exit probability of regulated establishments is, ceteris paribus, only one third of the exit probability of non-regulated establishments. We also find that the probability to change regulation status from being non-regulated to become regulated depends significantly on economic factors. In particular, establishments with weak profitability had the highest probability to come under environmental regulation.

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Authors and Affiliations

  1. University of Oslo, Department of Economics and Foundation for Research in Economics and Business Administration, Oslo, Norway

    Erik Biørn, Rolf Golombek* & Arvid Raknerud

Authors
  1. Erik Biørn
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  2. Rolf Golombek*
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  3. Arvid Raknerud
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Correspondence to Rolf Golombek*.

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Biørn, E., Golombek*, R. & Raknerud, A. Environmental Regulations and Plant Exit. Environmental and Resource Economics 11, 35–59 (1998). https://doi.org/10.1023/A:1008276509284

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  • DOI: https://doi.org/10.1023/A:1008276509284

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