Transboundary Movement of Waste: Second-hand Markets and Illegal Shipments
AbstractIn a stylized model of international trade, firms in the North indirectly export second-hand products to a representative firm in the South to be reused as intermediate goods, with potential trade gains. The level of reusability of waste products is a crucial choice variable in the North. This is because, in the presence of imperfect international monitoring, non-reusable waste can be illegally mixed with reusable waste. I explore the driving forces for illegal waste movement, with a particular focus on local waste regulations such as the EU’s Directive on Waste Electrical and Electronic Equipment. Under mild conditions, it is shown that increasingly stringent regulations in the North induce Northern firms to reduce product reusability. Consequently, the flow of non-reusable waste to the South increases, magnifying the pollution haven effect.
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Bibliographic InfoPaper provided by CIRANO in its series CIRANO Working Papers with number 2011s-77.
Date of creation: 01 Dec 2011
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waste; second-hand products; environmental regulations; trade; green design; illegal market;
Find related papers by JEL classification:
- F18 - International Economics - - Trade - - - Trade and Environment
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-03 (All new papers)
- NEP-ENV-2012-01-03 (Environmental Economics)
- NEP-REG-2012-01-03 (Regulation)
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