Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/78262
Authors: 
Kuhn, Michael
Year of Publication: 
1997
Series/Report no.: 
Thünen-Series of Applied Economic Theory 06
Abstract: 
Endogenous firm location is analyzed in a discrete two-region-two-firm model of product differentiation. In a non-cooperative game, two regional governments first decide on the imposition (or lifting) of domestic production standards; firms then choose technology (clean or polluting), location and price. Equilibrium quality and location structure are determined analytically. The existence of consumers willing to pay a premium on clean production methods, and the possibility of inter-firm pollution alleviate the tendency of firms to delocate into the region with the weaker regulation; then, a deregulatory race to the bottom is less likely.
Subjects: 
environmental policy
product differentiation
firm location
institutional competi-tion
green preferences
JEL: 
H73
L13
Q28
Document Type: 
Working Paper

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