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Firm internal network, environmental regulation, and plant death

Publication ,  Journal Article
Cui, J; Moschini, GC
Published in: Journal of Environmental Economics and Management
May 1, 2020

This article examines the role of a firm's internal network in determining plant shutdown decisions in response to environmental regulations. Using unique plant-level data for U.S. manufacturing industries from 1990 to 2007, we find evidence that, in response to increasingly stringent environmental regulations at the county level, multi-plant firms do exercise their greater flexibility in adjusting production, relative to single-plant firms. Specifically, in regulated counties, the likelihood of a plant shutting down is higher for multi-plant firms. Moreover, we measure the firm internal network effect at the local, neighborhood, and the wider-area levels, as defined by the number of affiliated plants clustered in different regional levels. Their effects on plant closure decisions for dirty subsidiaries vary with the network level. We further decompose the neighborhood network into those in regulated and unregulated neighborhood counties, and examine how these network metrics are associated with closure decisions of dirty plants affiliated with multi-plant firms. The presence of more sibling plants residing in neighboring counties that are free from regulatory controls are associated with a higher closure probability of dirty plants in a regulated county.

Duke Scholars

Published In

Journal of Environmental Economics and Management

DOI

EISSN

1096-0449

ISSN

0095-0696

Publication Date

May 1, 2020

Volume

101

Related Subject Headings

  • Agricultural Economics & Policy
  • 3801 Applied economics
  • 1402 Applied Economics
  • 1401 Economic Theory
  • 0502 Environmental Science and Management
 

Citation

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Chicago
ICMJE
MLA
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Cui, J., & Moschini, G. C. (2020). Firm internal network, environmental regulation, and plant death. Journal of Environmental Economics and Management, 101. https://doi.org/10.1016/j.jeem.2020.102319
Cui, J., and G. C. Moschini. “Firm internal network, environmental regulation, and plant death.” Journal of Environmental Economics and Management 101 (May 1, 2020). https://doi.org/10.1016/j.jeem.2020.102319.
Cui J, Moschini GC. Firm internal network, environmental regulation, and plant death. Journal of Environmental Economics and Management. 2020 May 1;101.
Cui, J., and G. C. Moschini. “Firm internal network, environmental regulation, and plant death.” Journal of Environmental Economics and Management, vol. 101, May 2020. Scopus, doi:10.1016/j.jeem.2020.102319.
Cui J, Moschini GC. Firm internal network, environmental regulation, and plant death. Journal of Environmental Economics and Management. 2020 May 1;101.
Journal cover image

Published In

Journal of Environmental Economics and Management

DOI

EISSN

1096-0449

ISSN

0095-0696

Publication Date

May 1, 2020

Volume

101

Related Subject Headings

  • Agricultural Economics & Policy
  • 3801 Applied economics
  • 1402 Applied Economics
  • 1401 Economic Theory
  • 0502 Environmental Science and Management