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Pollution havens and industrial agglomeration

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  • Zeng, Dao-Zhi
  • Zhao, Laixun

Abstract

This paper examines the pollution haven hypothesis using a spatial-economy model of two countries and two sectors. The manufacturing sector generates cross-border pollution which reduces cross-sectoral productivity of agricultural goods, and lowers local income. We derive a demand-reducing effect that discourages firms to move to the country with laxer environmental regulations, in the absence of any comparative advantage. Our analysis also demonstrates that manufacturing agglomeration forces can alleviate the pollution-haven effect: a pollution haven may not arise if environmental regulation is slightly more stringent in the larger country.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 58 (2009)
Issue (Month): 2 (September)
Pages: 141-153

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Handle: RePEc:eee:jeeman:v:58:y:2009:i:2:p:141-153

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Web page: http://www.elsevier.com/locate/inca/622870

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Keywords: Pollution abatement Industrial agglomeration Trade costs;

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References

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  1. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 9(2), pages 169-189, Spring.
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  5. Eskeland, Gunnar S. & Harrison, Ann E., 2003. "Moving to greener pastures? Multinationals and the pollution haven hypothesis," Journal of Development Economics, Elsevier, Elsevier, vol. 70(1), pages 1-23, February.
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  16. Takatoshi Tabuchi & Dao-Zhi Zeng, 2000. "Stability of Spatial Equilibrium," CIRJE F-Series, CIRJE, Faculty of Economics, University of Tokyo CIRJE-F-79, CIRJE, Faculty of Economics, University of Tokyo.
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Citations

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Cited by:
  1. repec:laf:wpaper:201202 is not listed on IDEAS
  2. 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.
  3. Forslid, Rikard & Okubo, Toshihiro & Sanctuary, Mark, 2013. "Trade, Transboundary Pollution and Market Size," Research Papers in Economics, Stockholm University, Department of Economics 2013:8, Stockholm University, Department of Economics.
  4. Yuyu Chen & Ginger Zhe Jin & Naresh Kumar & Guang Shi, 2013. "Gaming in Air Pollution Data? Lessons from China," NBER Working Papers 18729, National Bureau of Economic Research, Inc.
  5. Matthew A. Cole & Robert J.R. Elliott & Toshihiro Okubo, 2010. "Trade, Environmental Regulations and Industrial Mobility: An Industry-Level Study of Japan," Discussion Paper Series, Research Institute for Economics & Business Administration, Kobe University DP2010-22, Research Institute for Economics & Business Administration, Kobe University.
  6. Gori, Giuseppe Francesco & Lambertini, Luca, 2013. "Trade liberalisation between asymmetric countries with environmentally concerned consumers," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(4), pages 549-560.
  7. Anne Musson, 2012. "Construire l'attractivité durable régionale: l'exemple de l'Aquitaine," Working Papers, HAL hal-00704414, HAL.
  8. Ulrich Wagner & Christopher Timmins, 2009. "Agglomeration Effects in Foreign Direct Investment and the Pollution Haven Hypothesis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 43(2), pages 231-256, June.
  9. Kyriakopoulou, Efthymia & Xepapadeas, Anastasios, 2013. "Environmental policy, first nature advantage and the emergence of economic clusters," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(1), pages 101-116.
  10. Fabrice DARRIGUES & Jean-Marc MONTAUD, 2010. "Trade Liberalization, Environmental Regulation and Self-Regulation of Multinational Firms," Working Papers, CATT - UPPA - Université de Pau et des Pays de l'Adour 2010-2011_5, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Nov 2010.
  11. Francesca Sanna-Randaccio & Roberta Sestini & Ornella Tarola, 2014. "Unilateral Climate Policy and Foreign Direct Investment with Firm and Country Heterogeneity," Working Papers, Fondazione Eni Enrico Mattei 2014.55, Fondazione Eni Enrico Mattei.
  12. TAKATSUKA Hajime & NAKAMURA Ryohei, 2010. "Emission Credit Trading and Regional Inequalities," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 10062, Research Institute of Economy, Trade and Industry (RIETI).
  13. Anne Musson, 2012. "Construire l’attractivité durable régionale: l’exemple de l’Aquitaine," Larefi Working Papers, Larefi, Université Bordeaux 4 1202, Larefi, Université Bordeaux 4.

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