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Environmental policy and the dynamics of industrial location and residential choice

Published online by Cambridge University Press:  27 October 2025

Giovanni Bernardo Open the ORCID record for Giovanni Bernardo [Opens in a new window] ,
Pasquale Commendatore ,
Ingrid Kubin  and
Mauro Sodini
Giovanni Bernardo
Affiliation:
Department of Law, University of Naples Federico II, Naples, Italy
Pasquale Commendatore*
Affiliation:
Department of Law, University of Naples Federico II, Naples, Italy
Ingrid Kubin
Affiliation:
Department of Economics, WU Vienna University of Economics and Business, Vienna, Austria
Mauro Sodini
Affiliation:
Department of Law, University of Naples Federico II, Naples, Italy Department of Finance, Faculty of Economics, Technical University of Ostrava, Ostrava, Czech Republic
*
Corresponding author: Pasquale Commendatore; Email: pasquale.commendatore@unina.it
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Abstract

Environmental issues have an international dimension, with causes and consequences that extend beyond national borders—including the effects of the policies designed to address them. This paper investigates how different levels of environmental regulation influence the long-term spatial distribution of firms and households. The results suggest that only highly asymmetric regulations align with the Pollution Haven Hypothesis, causing firms to cluster in areas with lax environmental standards. In contrast, moderate differences in regulation tend to improve environmental quality across regions and can generate positive spillovers for countries adopting greener policies, such as attracting new residents and stimulating investment. While this lends support to the Porter Hypothesis, it does so through a less conventional mechanism. Rather than fostering innovation, stringent regulations enhances regional attractiveness by expanding the market size.

Keywords

New economic geographyenvironmental pollutionenvironmental policyindustry locationresidence choiceeconomic dynamicsC62D43F12F2Q50R30

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Type
Articles
Information
Macroeconomic Dynamics , Volume 29 , 2025 , e151
Copyright
© The Author(s), 2025. Published by Cambridge University Press

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