Developing Country Second-Mover Advantage in Competition Over Standards and Taxes
AbstractWe show that, in competition between a developed country and a developing country over environmental standards and taxes, the developing country may have a 'second-mover advantage.' In our model, firms do not unanimously prefer lower environmental-standard levels. We introduce this feature to an otherwise familiar model of fiscal competition. Three distinct outcomes can be characterized by varying the cost to firms of 'standard mismatch': (1) the outcome may be efficient; (2) the developing country may be a 'pollution haven,' where some firms escape excessively high environmental standards in the developed country; (3) environmental standards may be set excessively high.
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Bibliographic InfoPaper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0909.
Date of creation: Jul 2009
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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html
Environmental standards; fiscal competition; second-mover advantage; tax competition;
Find related papers by JEL classification:
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-09-11 (All new papers)
- NEP-DEV-2009-09-11 (Development)
- NEP-ENV-2009-09-11 (Environmental Economics)
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- Valeska Groenert & Benjamin Zissimos, 2011.
"Developing Country Second-Mover Advantage in Competition over Environmental Standards and Taxes,"
CESifo Working Paper Series
3686, CESifo Group Munich.
- Valeska Groenert & Myrna Wooders & Ben Zissimos, 2010. "Developing Country Second-Mover Advantage in Competition over Environmental Standards and Taxes," Vanderbilt University Department of Economics Working Papers 1012, Vanderbilt University Department of Economics.
- Valeska Groenert & Ben Zissimos, 2011. "Developing Country Second-Mover Advantage in Competition over Environmental Standards and Taxes," Vanderbilt University Department of Economics Working Papers 1102, Vanderbilt University Department of Economics.
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