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Developing Country Second-Mover Advantage in Competition Over Standards and Taxes

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Author Info

  • Valeska Groenert

    ()
    (Department of Economics, Vanderbilt University)

  • Myrna Wooders

    ()
    (Department of Economics, Vanderbilt University)

  • Ben Zissimos

    ()
    (Department of Economics, Vanderbilt University)

Abstract

We 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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File URL: http://www.accessecon.com/pubs/VUECON/vu09-w09.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0909.

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Date of creation: Jul 2009
Date of revision:
Handle: RePEc:van:wpaper:0909

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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

Related research

Keywords: Environmental standards; fiscal competition; second-mover advantage; tax competition;

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Cited by:
  1. 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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