Transboundary pollution in China: a study of polluting firms' location choices in Hebei province

Abstract Transboundary pollution is a particularly serious problem as it leads people located at regional borders to disproportionately suffer from pollution. In China, where the environmental policy is decentralized and where environmental conflicts between provinces have occurred several times, transboundary pollution is likely to exist. However, until now, nearly all the studies have focused on developed countries. In this paper we study whether transboundary pollution problems exist in China. To do so, we estimate whether, within Hebei province, polluting firms are more likely to set up in border counties than in interior ones. The estimations of a count-data model allow us to conclude that border counties are more attractive destinations for polluting firms than counties located within the province. Moreover, it appears that this effect has strengthened over time.