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Environmental Outsourcing

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Author Info

  • Matthew A. Cole

    (Department of Economics, University of Birmingham, UK)

  • Robert J.R. Elliott

    (Department of Economics, University of Birmingham, UK)

  • Toshihiro Okubo

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

In recent years there has been a dramatic increase in the number of firms shifting stages of their production processes overseas. In this paper we investigate whether firms outsource the dirtier stages of production to minimise domestic environmental regulation costs - a process broadly consistent with the pollution haven hypothesis. We develop a theoretical model of environmental outsourcing that focuses on the roles played by firm size and productivity, transport costs and environmental regulations. We test the model's predictions using a firm-level data set for Japan and do find evidence of an 'environmental outsourcing' effect.

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File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2011-12.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number DP2011-12.

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Length: 40 pages
Date of creation: Mar 2011
Date of revision:
Handle: RePEc:kob:dpaper:dp2011-12

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Keywords: Environmental regulations; Trade; Outsourcing; Firm-level.;

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References

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  1. Eiichi Tomiura, 2008. "Foreign outsourcing and the product cycle: evidence from micro data," Applied Economics Letters, Taylor & Francis Journals, vol. 15(13), pages 1019-1022.
  2. Tomiura, Eiichi, 2007. "Foreign outsourcing, exporting, and FDI: A productivity comparison at the firm level," Journal of International Economics, Elsevier, vol. 72(1), pages 113-127, May.
  3. Tomiura, Eiichi, 2005. "Foreign outsourcing and firm-level characteristics: Evidence from Japanese manufacturers," Journal of the Japanese and International Economies, Elsevier, vol. 19(2), pages 255-271, June.
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Cited by:
  1. Richard T. Carson & W. Michael Hanemann, & Raymond J. Kopp & Jon A. Krosnick & Robert C. Mitchell & Stanley Presser & Paul A. Rudd & V. Kerry Smith & Michael Conaway & Kerry Martin, 1997. "Temporal Reliability of Estimates from Contingent Valuation," Land Economics, University of Wisconsin Press, vol. 73(2), pages 151-163.
  2. Ciriaci, Daria & Palma, Daniela, 2010. "Geography, environmental efficiency and Italian economic growth: a spatially-adapted Environmental Kuznets Curve," MPRA Paper 22899, University Library of Munich, Germany.
  3. Forslid, Rikard & Okubo, Toshihiro & Ulltveit-Moe, Karen-Helene, 2011. "International trade, CO2 emissions and heterogeneous firms," CEPR Discussion Papers 8583, C.E.P.R. Discussion Papers.

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