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Environmental Policy and Trade of Manufacturing Goods in the Central and Eastern Enlargement of the European Union

Listed author(s):
  • Andrea Mantovani
  • Mark Vancauteren

We investigate empirically the link between environmental policy and trade with particular reference to the single market and enlargement. Incorporating the methodology of endogenous protection, we question if countries should wish to weaken their environmental policies in response to more trade integration; in particular, we look at the effect of harmonizing product regulations and the level of imports. The empirical answer suggests that harmonizing product regulations leads to more trade; domestic environmental regulations have a larger negative effect on trade when they are treated as endogenous; and EU countries relax domestic environmental regulations due to the harmonization of regulations, whereas the Central and Eastern European countries that joined or will join the European Union set more stringent environmental regulations.

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File URL: http://hdl.handle.net/10.2753/REE1540-496X440303
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Article provided by Taylor & Francis Journals in its journal Emerging Markets Finance and Trade.

Volume (Year): 44 (2008)
Issue (Month): 3 (May)
Pages: 34-47

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Handle: RePEc:taf:emfitr:v:44:y:2008:i:3:p:34-47
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References listed on IDEAS
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  1. Mark N. Harris & László Kónya & László Mátyás, 2000. "Modelling the Impact of Environmental Regulations on Bilateral Trade Flows: OECD 1990-96," Melbourne Institute Working Paper Series wp2000n11, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  2. Arik Levinson & M. Scott Taylor, 2008. "Unmasking The Pollution Haven Effect," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 223-254, 02.
  3. Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 138-160, February.
  4. H. David Robison, 1988. "Industrial Pollution Abatement: The Impact on Balance of Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 21(1), pages 187-199, February.
  5. Xinpeng Xu, 2000. "International Trade and Environmental Regulation: Time Series Evidence and Cross Section Test," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(3), pages 233-257, November.
  6. Josh Ederington & Jenny Minier, 2003. "Is environmental policy a secondary trade barrier? An empirical analysis," Canadian Journal of Economics, Canadian Economics Association, vol. 36(1), pages 137-154, February.
  7. Kishore Gawande, 1999. "Trade Barriers as Outcomes from Two-Stage Games: Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 32(4), pages 1028-1056, August.
  8. van Beers, Cees & van den Bergh, Jeroen C J M, 1997. "An Empirical Multi-country Analysis of the Impact of Environmental Regulations on Foreign Trade Flows," Kyklos, Wiley Blackwell, vol. 50(1), pages 29-46.
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