How many new startup firms are attracted to locating in California because of the state's cutting edge carbon mitigation AB32 law? This article argues that there are lots and that these firms will reconsider their decision to locate in California if AB32 is not enacted. This synergy between private investment and public regulation is an under-researched topic.
Conversely, there are other firms who say that they will leave California if AB32 is enacted. Who is telling the truth? Both sets of firms may be.
Could a good applied micro economist with data on the locational choice of firms and industries across geographical areas test whether both claims are true? Since AB32's rules have not come into play yet, it would be hard to use historical data to estimate how responsive firms are to regulatory rules that have never been in place. If AB32's impacts will mainly be on prices of electricity and other traded goods (such as labor and capital), then we could use past variation in prices to study firm entry and exit from the California local market.