Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86286
Authors: 
Mulatu, Abay
Florax, Raymond J.G.M.
Withagen, Cees A.
Year of Publication: 
2004
Series/Report no.: 
Tinbergen Institute Discussion Paper 04-020/3
Abstract: 
We empirically investigate the responsiveness of international trade to the stringency of environmental regulation. Stringent environmental regulation may impair the export competitiveness of ‘dirty’ domestic industries, and as a result, ‘pollution havens’ emerge in countries where environmental regulation is ‘over-lax.’ We examine the impact of pollution abatement and control costs on net exports in order to grasp this phenomenon. Theoretically, our analysis is related to a general equilibrium model of trade and pollution nesting the pollution haven motive for trade with the factor endowment motive. We analyze data on two-digit ISIC manufacturing industries during the period 1977–1992 in Germany, the Netherlands and the US, and show that trade patterns in ‘dirty’ commodities are jointly determined by relative factor endowments and environmental stringency differentials.
Subjects: 
Trade
competitiveness
environmental policy
pollution abatement
pollution haven
JEL: 
F14
L50
Q28
Document Type: 
Working Paper

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