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Environmental Regulation and International Trade

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Author Info
Abay Mulatu () (London School of Economics, London)
Raymond J.G.M. Florax () (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)
Cees A. Withagen () (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)

Additional information is available for the following registered author(s):

Abstract

We empirically investigate the responsiveness of international trade to the stringency of environmental regulation. Stringent environmental regulation may impair the export competitiveness of ‘dirty’ domestic industries, and as a result, ‘pollution havens’ emerge in countries where environmental regulation is ‘over-lax.’ We examine the impact of pollution abatement and control costs on net exports in order to grasp this phenomenon. Theoretically, our analysis is related to a general equilibrium model of trade and pollution nesting the pollution haven motive for trade with the factor endowment motive. We analyze data on two-digit ISIC manufacturing industries during the period 1977–1992 in Germany, the Netherlands and the US, and show that trade patterns in ‘dirty’ commodities are jointly determined by relative factor endowments and environmental stringency differentials.

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Publisher Info
Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 04-020/3.

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Date of creation: 17 Feb 2004
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Handle: RePEc:dgr:uvatin:20040020

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Web page: http://www.tinbergen.nl/

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Related research
Keywords: Trade; competitiveness; environmental policy; pollution abatement; pollution haven;

Other versions of this item:

Find related papers by JEL classification:
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Abay Mulatu & Raymond J.G.M. Florax & Cees A.A.M. Withagen, 2001. "Environmental Regulation and Competitiveness," Tinbergen Institute Discussion Papers 01-039/3, Tinbergen Institute. [Downloadable!]
  2. Josh Ederington & Jenny Minier, 2003. "Is environmental policy a secondary trade barrier? An empirical analysis," Canadian Journal of Economics, Canadian Economics Association, vol. 36(1), pages 137-154, February. [Downloadable!] (restricted)
    Other versions:
  3. Deardorff, Alan V., 1984. "Testing trade theories and predicting trade flows," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 10, pages 467-517 Elsevier. [Downloadable!] (restricted)
  4. Copeland, Brian R & Taylor, M Scott, 1994. "North-South Trade and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 755-87, August. [Downloadable!] (restricted)
    Other versions:
  5. 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)
  6. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001. "Is Free Trade Good for the Environment?," American Economic Review, American Economic Association, vol. 91(4), pages 877-908, September. [Downloadable!] (restricted)
    Other versions:
  7. Arik Levinson & M. Scott Taylor, 2004. "Unmasking the Pollution Haven Effect," NBER Working Papers 10629, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Horst Siebert, 1974. "Environmental protection and international specialization," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 110(3), pages 494-508, September. [Downloadable!] (restricted)
  9. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-37, September. [Downloadable!] (restricted)
    Other versions:
  10. 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.
    Other versions:
  11. Xinpeng Xu, 2000. "International Trade and Environmental Regulation: Time Series Evidence and Cross Section Test," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 17(3), pages 233-257, November. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Cees A. Withagen & Raymond J.G.M. Florax & Abay Mulatu, 2007. "Optimal environmental policy differentials in open economies under emissions constraints," The School of Economics Discussion Paper Series 0701, Economics, The University of Manchester. [Downloadable!]
    Other versions:
  2. Mark J. Koetse & Henri L.F. de Groot & Raymond J.G.M. Florax, . "Capital-Energy Substitution and Shifts in Factor Demand: A Meta-Analysis," Tinbergen Institute Discussion Papers 06-061/3, Tinbergen Institute. [Downloadable!]
    Other versions:
  3. Vries, Frans P. de & Withagen, Cees, 2005. "Innovation and environmental stringency: the case of sulfur dioxide abatement," Discussion Paper 18, Tilburg University, Center for Economic Research. [Downloadable!]
  4. Chris Elbers & Cees Withagen, 2004. "Environmental Policy, Population Dynamics and Agglomeration," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 0(2). [Downloadable!]
  5. Medalla, Erlinda & Lazaro, Dorothea C., 2005. "Does Trade Lead to a Race to the Bottom in Environmental Standards? Another Look at the Issues," Discussion Papers DP 2005-23, Philippine Institute for Development Studies. [Downloadable!]
  6. Odd Rune Straume, 2006. "Product Market Integration and Environmental Policy Coordination in An International Duopoly," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(4), pages 535-563, August. [Downloadable!] (restricted)
  7. Barbara Stoschek, 2007. "The Political Economy of Environmental Regulations and Industry Compensation," cege – Center for European, Governance and Economic Development Research Discussion Papers 65, cege – Center for European, Governance and Economic Development Research, University of Goettingen (Germany)., revised 26 Jun 2007. [Downloadable!]
  8. Abay Mulatu & Raymond J.G.M. Florax & Cees Withagen, 2004. "Environmental Regulation and International Trade: Empirical Results for Germany, the Netherlands and the US, 1977-1992," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 0(2). [Downloadable!]
  9. Babool, Md. Ashfaqul I. & Reed, Michael, 2005. "International Competitiveness and Environmental Regulations," 2005 Annual meeting, July 24-27, Providence, RI 19496, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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