Sustainability, Local Environmental Behaviour and Firm Location Decisions

Abstract This paper uses Mercantile Register data to analyse the location decisions of firms in Catalan municipalities (between 2010 and 2019). Using count data panel estimations, we focus on local sustainability characteristics. The identification of the location patterns and the effects of local environmental policies on firms belonging to different sustainability industries constitute a contribution to the empirical location literature. Our results help in understanding entry processes at the local level and how both citizens' environmental values and local environmental policies shape these. We show that (i) firms locate differently depending on their sustainability profile and (ii) local environmental policies have stronger effects on the location decisions of sustainability‐oriented firms.