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Can Rich Countries Become Pollution Havens?

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  • Victoria I. Umanskaya
  • Edward B. Barbier

Abstract

This paper bridges the gap between two‐country Ricardian trade models where differences in environmental policies create pollution havens in a poorer region with weaker pollution regulations, and 2 × 2 Heckscher–Ohlin models that predict under certain conditions that pollution havens may occur in a richer region with tighter regulations. By relaxing the Heckscher–Ohlin assumptions of factor price equalization and no specialization, we show how creation of pollution havens in either region is possible, due to the interplay of policy and factor‐endowment motives. We also analyze the conditions for creating pollution havens in the cases of exogenous and endogenous environmental policy.

Suggested Citation

  • Victoria I. Umanskaya & Edward B. Barbier, 2008. "Can Rich Countries Become Pollution Havens?," Review of International Economics, Wiley Blackwell, vol. 16(4), pages 627-640, September.
    • Handle: RePEc:bla:reviec:v:16:y:2008:i:4:p:627-640
    DOI: 10.1111/j.1467-9396.2008.00768.x
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    References listed on IDEAS

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    Cited by:

    1. Louis Dupuy & Matthew Agarwala, 2014. "International trade and sustainable development," Chapters, in: Giles Atkinson & Simon Dietz & Eric Neumayer & Matthew Agarwala (ed.), Handbook of Sustainable Development, chapter 25, pages 399-417, Edward Elgar Publishing.
    2. Bogmans, C.W.J., 2011. "Essays on international trade and the environment," Other publications TiSEM b7453a6c-33b3-49a2-b5cc-8, Tilburg University, School of Economics and Management.
    3. Louis Dupuy, 2012. "International Trade and Sustainability: A survey," Larefi Working Papers 1201, Larefi, Université Bordeaux 4.
    4. Louis Dupuy, 2015. "International Trade and Structural Change: a Dynamic Model of Weak Sustainability," Discussion Papers in Environment and Development Economics 2015-12, University of St. Andrews, School of Geography and Sustainable Development.
    5. Baomin Dong & Jiong Gong & Xin Zhao, 2012. "FDI and environmental regulation: pollution haven or a race to the top?," Journal of Regulatory Economics, Springer, vol. 41(2), pages 216-237, April.
    6. Christian Beermann, 2015. "Climate Policy and the Intertemporal Supply of Fossil Resources," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 62.
    7. Bidisha Lahiri, 2015. "Role of labor intensity interaction in the relation between abatement expenditure and production," Economics Bulletin, AccessEcon, vol. 35(1), pages 407-413.
    8. Louis Dupuy, 2012. "International Trade and Sustainability: A survey," Larefi Working Papers 201201, Larefi, Université Bordeaux 4.

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