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Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?

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Author Info

  • Quiroga, Miguel

    ()
    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Sterner, Thomas

    ()
    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Persson, Martin

    ()
    (department of Energy and Environment, Chalmers University of Technology, Gothenburg)

Abstract

We aim to study whether lax environmental regulations induce comparative advantages, causing the least-regulated countries to specialize in polluting industries. The study is based on Trefler and Zhu’s (2005) definition of the factor content of trade. For the econometrical analysis, we use a cross-section of 71 countries in 2000 to examine the net exports in the most polluting industries. We try to overcome three weaknesses in the empirical literature: the measurement of environmental endowments or environmental stringency, the possible endogeneity of the explanatory variables, and the influence of the industrial level of aggregation. As a result, we do find some evidence in favor of the pollution-haven effect. The exogeneity of the environmental endowments was rejected in several industries, and we also find that industrial aggregation matters.

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File URL: http://hdl.handle.net/2077/21511
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Bibliographic Info

Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 412.

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Length: 38 pages
Date of creation: 04 Dec 2009
Date of revision:
Publication status: Published as Quiroga, Miguel, Thomas Sterner and Martin Persson, 'Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?' in RFF Discussion Paper Series, RFF DP07-08, 2007, pages 38.
Handle: RePEc:hhs:gunwpe:0412

Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Related research

Keywords: comparative advantage; environmental regulation; trade; pollution haven; Porter hypothesis;

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References

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Cited by:
  1. Schoenherr, Tobias, 2012. "The role of environmental management in sustainable business development: A multi-country investigation," International Journal of Production Economics, Elsevier, vol. 140(1), pages 116-128.

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