Do Environmental Regulations Influence the Location Behavior of French Firms?

This paper investigates the impact of environmental regulations on the location choices made by firms for their industrial activities, using a sample of newly appeared imports of French firms from foreign industrial subsidiaries. A simple static model based on the production cost minimization is developed in order to control for heterogeneous factor costs within countries, distinguishing skilled labor, unskilled labor, and capital. Environmental regulations are then shown to be neither statistically nor economically a significant determinant of the location behavior of French firms.