In numerous studies, economists have found little empirical evidence that environmental regulations affect trade flows. In this paper, we propose and test several common explanations for why the effect of environmental regulations on trade may be difficult to detect. We demonstrate that while most trade occurs among industrialized economies, environmental regulations have stronger effects on trade between industrialized and developing economies. We find that for most industries, pollution abatement costs are a small component of total costs, and are unrelated to trade flows. In addition, we show that those industries with the largest pollution abatement costs also happen to be the least geographically mobile, or footloose.' After accounting for these distinctions, we measure a significant effect of pollution abatement costs on imports from developing countries, and in pollution-intensive, footloose industries.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
9718.
Length: Date of creation: May 2003 Date of revision: Handle: RePEc:nbr:nberwo:9718
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Josh Ederington, Arik Levinson & Jenny Minier, .
"Footlose and Pollution Free,"
Working Papers
gueconwpa~03-03-04, Georgetown University, Department of Economics.
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Find related papers by JEL classification: F1 - International Economics - - Trade F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
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Arik Levinson & M. Scott Taylor, 2008.
"Unmasking The Pollution Haven Effect,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 223-254, 02.
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