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Sources of Comparative Advantage in Polluting Industries

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  • Fernando Broner
  • Paula Bustos
  • Vasco Carvalho

Abstract

We study the determinants of comparative advantage in polluting industries. To do this, we combine data on environmental policy at the country level with data on pollution intensity at the industry level and show that countries with laxer environmental regulation have a comparative advantage in polluting industries. This is consistent with the existence of a pollution haven effect. Further, we address the potential problem of reverse causality. To do so we propose an instrument for environmental regulation based on meteorological determinants of pollution dispersion as identified by the atmospheric pollution literature. We find that the pollution haven effect is causal and economically significant.

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Bibliographic Info

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 655.

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Date of creation: Mar 2012
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Handle: RePEc:bge:wpaper:655

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Keywords: international trade; environmental regulation; comparative advantage; air pollution;

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Citations

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Cited by:
  1. James R. Markusen, 2013. "Per-capita Income as a Determinant of International Trade and Environmental Policies," NBER Working Papers 19754, National Bureau of Economic Research, Inc.
  2. Claire Brunel and Arik Levinson, 2013. "Measuring Environmental Regulatory Stringency," Working Papers gueconwpa~13-13-02, Georgetown University, Department of Economics.
  3. James R. Markusen, 2014. "Per-Capital Income as a Determinant of International Trade and Environment Policies," CESifo Working Paper Series 4618, CESifo Group Munich.
  4. Svetlana Batrakova, 2012. "Does industry concentration matter for pollution haven effects?," Grantham Research Institute on Climate Change and the Environment Working Papers 90, Grantham Research Institute on Climate Change and the Environment.
  5. Chung, Sunghoon, 2014. "Environmental regulation and foreign direct investment: Evidence from South Korea," Journal of Development Economics, Elsevier, vol. 108(C), pages 222-236.
  6. Sunghoon Chung, 2012. "Environmental Regulation and the Pattern of Outward FDI: An Empirical Assessment of the Pollution Haven Hypothesis," Departmental Working Papers 1203, Southern Methodist University, Department of Economics.

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