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Environmental policy and industrial competitiveness: The pollution haven hypothesis reconsidered

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  • Bommer, Rolf

Abstract

The Pollution-Haven Hypothesis suggests that tight environmental standards reduce domestic producers' competitiveness and give rise to their relocating to countries with more lenient standards. This paper questions that relocation is always caused by reduced competitiveness at home. By using a signaling approach, I show that relocation can be undertaken for purely strategic reasons. Relocation is the producer's tool to convince the policy maker to refrain from a further tightening of environmental control. I show that trade liberalization increases probability of strategic relocation.

Suggested Citation

  • Bommer, Rolf, 1995. "Environmental policy and industrial competitiveness: The pollution haven hypothesis reconsidered," Discussion Papers, Series II 262, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    • Handle: RePEc:zbw:kondp2:262
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    References listed on IDEAS

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    More about this item

    Keywords

    environmental policy; trade liberalization; industrial competitiveness; international political economy; signaling;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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