Industrial Characteristics, Environmental Regulations and Air Pollution: An Analysis of the UK Manufacturing Sector

Abstract

This paper examines and quantifies the complex linkages between industrial activity, environmental regulations and air pollution. Couched in terms of the demand for, and the supply of, environmental services we utilize a new dataset of UK industry specific emissions for a variety of pollutants between 1990 and 1998. Our analysis allows us to investigate the role played by different determinants of emissions intensity. We find pollution intensity to be a positive function of energy use and physical and human capital intensity. Conversely, we find pollution intensity to be a negative function of the size of the average firm in an industry, the productivity of an industry and the industry's expenditure on capital and research and development. Our results also indicate that regulations, both formal and informal, have been successful in reducing pollution intensity.