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Ecological dumping under foreign investment quotas

Author

Listed:
  • Yasuyuki Sugiyama

    (Graduate School of Economics, Osaka University)

  • Muneyuki Saito

    (Graduate School of Economics, Osaka University)

Abstract

In this paper, we examine the discrimination of emission taxes between the export and nontradable sectors in a small country. A few articles indicate that there should be no differentiation of environmental policies between sectors in a small country if the government uses indirect instruments as emission taxes. However, we show that the discrimination of emission taxes may occur in a small country that imposes foreign investment quotas. In particular, the possibility that ecological dumping occurs is higher if export goods are more labor intensive than import goods, as in developing countries. Moreover, in the case where imported goods are most capital intensive, both emission tax rates may be lower than marginal environmental damage, and ecological dumping may occur. It is also shown that easing foreign capital quotas may deteriorate the small country fs welfare.

Suggested Citation

  • Yasuyuki Sugiyama & Muneyuki Saito, 2008. "Ecological dumping under foreign investment quotas," Discussion Papers in Economics and Business 08-31, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:0831
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    References listed on IDEAS

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    More about this item

    Keywords

    ecological dumping; emission tax; nontraded goods; international trade; capital movement;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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