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Consumers' Ecological Awareness, Environmental Regulation and MNCs' Choices in a Global Economy


  • Fabrice Darrigues

    () (CATT, Universit¨¦ de Pau, France)

  • Jean-Marc Montaud

    () (CATT, Universit¨¦ de Pau, France)


Using a monopolistic competition model with mobile capital, in which firms may choose between ¡°dirty¡± or ¡°clean¡± technology, this paper investigates the relationship between the environment, trade liberalization, and the geographical and technical choices of multinational firms. Simulation results show that beyond environmental regulations, the ecological sensitivity of consumers can serve as a market mechanism that urges firms to self-regulate. In particular, local sensitivity to environmental issues amplifies the ¡°pollution haven¡± phenomenon, as induced by an environmental tax, whereas a more comprehensive environmental awareness attenuates or cancels this phenomenon gradually as liberalization progresses.

Suggested Citation

  • Fabrice Darrigues & Jean-Marc Montaud, 2012. "Consumers' Ecological Awareness, Environmental Regulation and MNCs' Choices in a Global Economy," Review of Economics & Finance, Better Advances Press, Canada, vol. 2, pages 15-29, May.
  • Handle: RePEc:bap:journl:120202

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    More about this item


    Trade; Monopolistic competition; Environmental performance; Location and economic geography; Environmental awareness;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth


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