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Strategic Policy and Environmental Quality: Helping the Domestic Industry to Provide Credible Information

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  • Mari Rege

Abstract

This paper shows that a country can improve an industry's competitiveness by requiring domestic firms to produce at the environmental standards at which they claim to produce or otherwise impose a penalty on those firms found cheating. Competitiveness will improve because this regulation will help the domestic industry to provide credible information about the environmental quality of its production. The credible information will differentiate domestic products from other products on the world market, and in this way increase consumers' willingness to pay for domestic products. Even if the government has no preferences for environmental quality, it has incentives to regulate its cheaters in order to help the domestic industry to provide credible information and thereby improve competitiveness. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • Mari Rege, 2000. "Strategic Policy and Environmental Quality: Helping the Domestic Industry to Provide Credible Information," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 15(3), pages 279-296, March.
  • Handle: RePEc:kap:enreec:v:15:y:2000:i:3:p:279-296
    DOI: 10.1023/A:1008360626542
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    References listed on IDEAS

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    1. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    2. Jonathan Eaton & Gene M. Grossman, 1986. "Optimal Trade and Industrial Policy Under Oligopoly," The Quarterly Journal of Economics, Oxford University Press, vol. 101(2), pages 383-406.
    3. Ulph, A., 1994. "Environmental policy and international trade: a survey of recent economic analysis," Discussion Paper Series In Economics And Econometrics 9423, Economics Division, School of Social Sciences, University of Southampton.
    4. Daniel F. Spulber, 1989. "Regulation and Markets," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262192756, January.
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    Citations

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    Cited by:

    1. Aditi Sengupta, 2010. "Signaling environmental quality to green consumers and the incentive to invest in cleaner technology: Effect of environmental regulation," Departmental Working Papers 1001, Southern Methodist University, Department of Economics.
    2. Mads Greaker, 2002. "Eco-labels, Production Related Externalities and Trade," Discussion Papers 332, Statistics Norway, Research Department.
    3. Andr, Francisco J. & Gonzlez, Paula & Porteiro, Nicols, 2009. "Strategic quality competition and the Porter Hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 57(2), pages 182-194, March.
    4. Sengupta, Aditi, 2015. "Competitive investment in clean technology and uninformed green consumers," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 125-141.
    5. Andreas Freytag & Leo Wangler, 2008. "Strategic Trade Policy als Response to Climate Change? The Political Economy of Climate Policy," Jena Economic Research Papers 2008-001, Friedrich-Schiller-University Jena.
    6. Sengupta, Aditi, 2012. "Investment in cleaner technology and signaling distortions in a market with green consumers," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 468-480.
    7. Stefan Ambec & Mark A. Cohen & Stewart Elgie & Paul Lanoie, 2013. "The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(1), pages 2-22, January.
    8. André, Francisco J., 2015. "Strategic Effects and the Porter Hypothesis," MPRA Paper 62237, University Library of Munich, Germany.
    9. Stephen DeLoach & Jayoti Das, 2008. "Resolving the paradox of social standards and export competitiveness," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 17(4), pages 467-483.
    10. Ben Youssef Adel & Abderrazak Chema, 2009. "Multiplicity of Eco-Labels, Competition, and the Environment," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 7(2), pages 1-24, December.
    11. Mads Greaker, 2006. "Eco-labels, Trade and Protectionism," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(1), pages 1-37, January.

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