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Trade liberalization, environmental regulation and self-regulation of multinational firms

Author

Listed:
  • Fabrice Darrigues

    (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)

  • Jean-Marc Montaud

    (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour)

Abstract

Using a monopolistic competition model with mobile capital, where firms may choose between a "dirty" or a "clean" technology, this work explores the relationship between environment, trade liberalization, geographical and technical choices of multinational firms. We show that beside of environmental regulation, the ecological sensitivity of consumers can also be a market mechanism which may urge firms to self-regulate. We show in particular that a local sensitivity of environmental issues amplifies the phenomenon of Pollution Haven induced by an environmental tax, while a more comprehensive environmental awareness attenuates or cancels it gradually as the liberalization progresses.

Suggested Citation

  • Fabrice Darrigues & Jean-Marc Montaud, 2011. "Trade liberalization, environmental regulation and self-regulation of multinational firms," Working papers of CATT hal-01880351, HAL.
    • Handle: RePEc:hal:wpcatt:hal-01880351
    Note: View the original document on HAL open archive server: https://hal-univ-pau.archives-ouvertes.fr/hal-01880351
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    References listed on IDEAS

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