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Environmental Policy and Industrial Competitiveness: The Pollution-Haven Hypothesis Reconsidered

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  • Bommer, Rolf
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    Abstract

    The pollution-haven hypothesis suggests that strict environmental standards reduce domestic producers' competitiveness and result in relocation to countries with more lenient standards. This paper examines the question of whether relocation is always caused by reduced competitiveness at home. By using a signaling approach, it is shown that relocation can be undertaken for purely strategic reasons. Relocation is the producer's tool of indirect rent-seeking to convince the policymaker to refrain from a further tightening of environmental control. It is also shown that trade liberalization increases the probability of strategic relocation. Copyright 1999 by Blackwell Publishing Ltd.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Review of International Economics.

    Volume (Year): 7 (1999)
    Issue (Month): 2 (May)
    Pages: 342-55

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    Handle: RePEc:bla:reviec:v:7:y:1999:i:2:p:342-55

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    Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576

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    Cited by:
    1. Isik, Murat, 2003. "Environmental Regulation And The Optimal Location Of The Firm Under Uncertainty," 2003 Annual meeting, July 27-30, Montreal, Canada, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 22066, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Valeria Costantini & Francesco Crespi, 2013. "Public policies for a sustainable energy sector: regulation, diversity and fostering of innovation," Journal of Evolutionary Economics, Springer, Springer, vol. 23(2), pages 401-429, April.
    3. Jiang, Yi & Lin, Tun & Zhuang, Juzhong, 2008. "Environmental Kuznets Curves in the People’s Republic of China: turning points and regional differences," MPRA Paper 21252, University Library of Munich, Germany.
    4. Dinda, Soumyananda, 2006. "Globalization and Environment: Can Pollution Haven Hypothesis alone explain the impact of Globalization on Environment?," MPRA Paper 50590, University Library of Munich, Germany, revised 15 Oct 2006.
    5. Jing Lan & Makoto Kakinaka & Xianguo Huang, 2012. "Foreign Direct Investment, Human Capital and Environmental Pollution in China," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 51(2), pages 255-275, February.
    6. Kukenova, Madina & Monteiro, Jose-Antonio, 2008. "Does Lax Environmental Regulation Attract FDI when accounting for "third-country" effects?," MPRA Paper 11321, University Library of Munich, Germany, revised Sep 2008.
    7. Costantini, Valeria & Crespi, Francesco, 2007. "Environmental regulation and the export dynamics of energy technologies," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 200708, University of Turin.
    8. Dinda, Soumyananda, 2004. "Environmental Kuznets Curve Hypothesis: A Survey," Ecological Economics, Elsevier, Elsevier, vol. 49(4), pages 431-455, August.

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