Moving to Opportunity for Polluting: Intra-City Evidence from China’s Land Market
Abstract
This paper provides new evidence on the within-city relocations of polluting sources. We focus on industrial land use, which can create long-lasting effects on pollution distribution. The research design exploits the first comprehensive air-pollution prevention plan in China creating within-city variations on incentives to relocate polluting sources. Using a triple-difference model, we find that after the regulation, the locations of land leased by polluting firms in the cities receiving more stringent regulation are farther away from monitoring stations. Mechanism analysis shows this shift is partly due to the demand side, but primarily driven by land supply decisions: local governments provide new polluting land parcels in more distant areas of the city. We show that the welfare gains from improved air quality are partly offset by losses in production due to remote locations.