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00-03 "Trade Liberalization and Pollution Intensive Industries in Developing Countries: A Partial Equilibrium Approach."

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Frank Ackerman
Kevin Gallagher

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Abstract

Economic theory suggests that liberalization of trade between countries with differing levels of environmental protection could lead pollution-intensive industry to concentrate in the nations where regulations are lax. This effect, often referred to as the "pollution haven" hypothesis, is much discussed in theory, but finds only ambiguous support in empirical research to date. Methodologies used for research on trade and environment differ widely; many are difficult to apply to practical policy questions. We develop a simple, partial equilibrium model explicitly designed to analyze the effects of a change in trade policy. Our model analyzes the relative concentrations of "clean" and "dirty" industries in two nations or regions, before and after the policy change. While lacking the theoretical rigor and mathematical intricacy of other modeling methods, our approach has the advantages of transparency and accessibility to a broad range of analysts and policy makers.

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File URL: http://ase.tufts.edu/gdae/publications/Working_Papers/Pollution.pdf
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Paper provided by GDAE, Tufts University in its series GDAE Working Papers with number 00-03.

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Handle: RePEc:dae:daepap:00-03

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  1. Dean, Judith M., 1992. "Trade and the environment : a survey of the literature," Policy Research Working Paper Series 966, The World Bank. [Downloadable!]
  2. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March. [Downloadable!] (restricted)
  3. Eskeland, Gunnar S. & Harrison, Ann E., 1997. "Moving to greener pastures : multinationals and the pollution-haven hypothesis," Policy Research Working Paper Series 1744, The World Bank. [Downloadable!]
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  4. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 5-29, October. [Downloadable!] (restricted)
  5. Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
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  6. Frank Ackerman, 2002. "Still dead after all these years: interpreting the failure of general equilibrium theory," Journal of Economic Methodology, Taylor and Francis Journals, vol. 9(2), pages 119-139, June. [Downloadable!] (restricted)
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This page was last updated on 2009-11-28.

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