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Abstract

This paper seeks to examine the role of multi-plant’s network to determine their affiliated plants’ emissions in response to tightened environmental regulations. Polluting plants, which are located across the nation and are exposed to regional environmental pressures, form a network through their affiliated parent company. We investigate whether or not these multi-plant firms, to avoid local environmental compliance, shift pollution emissions from their affiliated plants in regulated counties to those in unregulated ones, thereby leading to emissions leakage. We compile a unique detailed plant-level dataset that pertains to the U.S. manufacturing industry over the period 1990-2008. Taking advantage of the spatial and temporal variations of designated nonattaintment status at county level, we seek to identify the effects of multi-plant firms’ network on annual changes in emissions of affiliated plants residing in regulated areas as compared with those in unregulated areas.

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