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Sources of Comparative Advantage in Polluting Industries

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  • Broner, Fernando A
  • Bustos, Paula
  • Carvalho, Vasco M

Abstract

We study the determinants of comparative advantage in polluting industries. We combine data on environmental policy at the country level with data on pollution intensity at the industry level to show that countries with laxer environmental regulation have a comparative advantage in polluting industries. Further, we address the potential problem of reverse causality. We propose an instrument for environmental regulation based on meteorological determinants of pollution dispersion identified by the atmospheric pollution literature. We find that the effect of environmental regulation on the pattern of trade is causal and comparable in magnitude to the effect of physical and human capital.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9111.

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Date of creation: Sep 2012
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Handle: RePEc:cpr:ceprdp:9111

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

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References

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Citations

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Cited by:
  1. Markusen, James R., 2014. "Per-Capita Income as a Determinant of International Trade and Environmental Policies," CEPR Discussion Papers 9799, C.E.P.R. Discussion Papers.
  2. 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.
  3. Chung, Sunghoon, 2014. "Environmental regulation and foreign direct investment: Evidence from South Korea," Journal of Development Economics, Elsevier, vol. 108(C), pages 222-236.
  4. Claire Brunel and Arik Levinson, 2013. "Measuring Environmental Regulatory Stringency," Working Papers gueconwpa~13-13-02, Georgetown University, Department of Economics.
  5. James R. Markusen, 2014. "Per-Capital Income as a Determinant of International Trade and Environment Policies," CESifo Working Paper Series 4618, CESifo Group Munich.
  6. 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.

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