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Shadow prices, environmental stringency and international competitiveness

Author

Listed:
  • van Soest, D.P.

    (Tilburg University, School of Economics and Management)

  • List, J.A.
  • Jeppesen, T.

Abstract

Empirical tests of the relationship between international competitiveness and the severity of environmental regulations are hampered by the lack of pollution abatement cost data for non-U.S. countries. The theory of the firm suggests that environmental stringency can be measured by the difference between a polluting input's shadow price and its market price. We make a first attempt at quantifying such a measure for two industries located in nine European OECD countries. Overall, we provide (i) a new approach to measure cross-country regulatory differences in that we use a theoretically attractive measure of industry-specific private compliance cost, and (ii) empirical estimates that are an attractive tool for researchers and policymakers who are interested in examining how economic activity is influenced by compliance costs.
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Suggested Citation

  • van Soest, D.P. & List, J.A. & Jeppesen, T., 2006. "Shadow prices, environmental stringency and international competitiveness," Other publications TiSEM 4bc931be-8578-4508-9409-9, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:4bc931be-8578-4508-9409-9c5132d8bb47
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    References listed on IDEAS

    as
    1. Arik Levinson, 2001. "An Industry-Adjusted Index of State Environmental Compliance Costs," NBER Chapters, in: Behavioral and Distributional Effects of Environmental Policy, pages 131-158, National Bureau of Economic Research, Inc.
    2. John A. List & Daniel L. Millimet & Per G. Fredriksson & W. Warren McHone, 2003. "Effects of Environmental Regulations on Manufacturing Plant Births: Evidence from a Propensity Score Matching Estimator," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 944-952, November.
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    6. Burtraw, Dallas & Krupnick, Alan & Pizer, William & Morgenstern, Richard & Shih, Jhih-Shyang, 2001. "Workshop Report: Pollution Abatement Costs and Expenditures (PACE) Survey Design for 2000 and Beyond," RFF Working Paper Series dp-01-09, Resources for the Future.
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