Stricter environmental regulations are often opposed on the grounds that they will alter equilibrium capital flows. Empirical evidence in this area remains largely unresolved, mainly due to the quite disparate results found in the literature. This paper takes a positive look at the relationship between new manufacturing plant location decisions and environmental regulations by examining data from 11 studies that provide more than 365 observations. One major result from our meta-analysis is that methodological considerations play a critical role in shaping the body of received estimates. Our empirical estimates also lend insights into future research that is necessary before any robust conclusions can be made regarding the effects of environmental regulations on capital flows. Copyright 2002 Blackwell Publishers Inc.

Empirical tests of the relationship between international competitiveness and the severity of environmental regulations are hampered by the lack of pollution abatement cost data for non-U.S. countries. The theory of the firm suggests that environmental stringency can be measured by the difference between a polluting input's shadow price and its market price. We make a first attempt at quantifying such a measure for two industries located in nine European OECD countries. Overall, we provide (i) a new approach to measure crosscountry regulatory differences in that we use a theoretically attractive measure of industry-specific private compliance cost, and (ii) empirical estimates that are an attractive tool for researchers and policymakers who are interested in examining how economic activity is influenced by compliance costs. r 2005 Elsevier B.V. All rights reserved. JEL classification: H73; Q28; R38

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The literature on the e¨ects of environmental policy on the location behaviour of ®rms has so far failed to draw any ®rm conclusions. Di¨erent studies have shown that the e¨ects may be zero, negative or positive. They always tend to be small. This paper argues that methodological issues form a major explanation for the contradictory results. It discusses the methodological strengths and weaknesses of data collection and secondary data analysis. Moreover, several typical studies are reviewed both in terms of methodology and ®ndings. The paper ®nds that methodological issues tend to a¨ect the results. The main substantive result is that at the present intensity of environmental policy plant closing is most likely to result, followed by reduced location of new ®rms whereas relocation is the least likely response. The results have to be interpreted with caution, however, because of methodological problems inherent to most studies.JEL classi®cations: B41, C51, D21, Q28, R38

The emergence of the principle of subsidiarity in the early 1990s succeeded in raising the question of what level of government should do what in an enlarged Europe. This paper briefly summarizes the origins of the subsidiarity principle and considers the way in which it has been interpreted by the main EU institutions since the Maastricht Treaty moved it into the mainstream of European politics. Then it explores the implications of the subsidiarity debate in the context of the three main challenges facing EU environmental policy in the new millennium, namely improving implementation, encouraging environmental policy integration and preparing for enlargement. While the legal meaning of subsidiarity was greatly clarified by the 1999 Amsterdam Treaty, its substantive, long term impact upon the continuing process of European political integration is still open to question. Copyright © 2000 John Wiley & Sons, Ltd. and ERP Environment