Developing Country Second-Mover Advantage in Competition over Environmental 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 competi- tion. Four distinct outcomes can be characterized by varying the marginal cost to firms of an environmental externality: (1) the outcome may be efficient; (2) the developing country may be a 'pollution haven;' a place to escape excessively high environmental standards in the developed country; (3) the developing country may 'undercut' the developed country and attract all firms; (4) the developed country may be a pollution haven.
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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 1012.
Date of creation: Oct 2010
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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html
Environmental standards; fiscal competition; second mover advantage; tax competition.;
Other versions of this item:
- 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.
- 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.
- 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
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