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Can Rich Countries Become Pollution Havens?

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Author Info
Victoria I. Umanskaya
Edward B. Barbier

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Abstract

This paper bridges the gap between two-country Ricardian trade models where differences in environmental policies create pollution havens in a poorer region with weaker pollution regulations, and 2 × 2 Heckscher-Ohlin models that predict under certain conditions that pollution havens may occur in a richer region with tighter regulations. By relaxing the Heckscher-Ohlin assumptions of factor price equalization and no specialization, we show how creation of pollution havens in either region is possible, due to the interplay of policy and factor-endowment motives. We also analyze the conditions for creating pollution havens in the cases of exogenous and endogenous environmental policy. Copyright © 2008 The Authors. Journal compilation © 2008 Blackwell Publishing Ltd.

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File URL: http://www.blackwell-synergy.com/links/doi/10.1111/j.1467-9396.2008.00768.x
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Publisher Info
Article provided by Blackwell Publishing in its journal Review of International Economics.

Volume (Year): 16 (2008)
Issue (Month): 4 (09)
Pages: 627-640
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Handle: RePEc:bla:reviec:v:16:y:2008:i:4:p:627-640

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This page was last updated on 2009-11-22.

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