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Environmental Outsourcing

Author

Listed:
  • OKUBO Toshihiro
  • Matthew A. COLE
  • Robert J.R. ELLIOTT

Abstract

Recent years have witnessed a dramatic increase in the number of firms shifting stages of their production processes overseas. In this paper we investigate whether firms outsource the dirtier stages of production to minimise domestic environmental regulation costs - a process broadly consistent with the pollution haven hypothesis. We develop a theoretical model of environmental outsourcing that focuses on the roles played by firm size and productivity, transport costs and environmental regulations. We test the model's predictions using a firm-level data set for Japan. We find evidence of an 'environmental outsourcing' effect although this is mitigated by transport costs and other factors related to dirty good production.

Suggested Citation

  • OKUBO Toshihiro & Matthew A. COLE & Robert J.R. ELLIOTT, 2010. "Environmental Outsourcing," Discussion papers 10055, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:10055
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    References listed on IDEAS

    as
    1. Tomiura, Eiichi, 2005. "Foreign outsourcing and firm-level characteristics: Evidence from Japanese manufacturers," Journal of the Japanese and International Economies, Elsevier, vol. 19(2), pages 255-271, June.
    2. Eiichi Tomiura, 2008. "Foreign outsourcing and the product cycle: evidence from micro data," Applied Economics Letters, Taylor & Francis Journals, vol. 15(13), pages 1019-1022.
    3. Tomiura, Eiichi, 2007. "Foreign outsourcing, exporting, and FDI: A productivity comparison at the firm level," Journal of International Economics, Elsevier, vol. 72(1), pages 113-127, May.
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    Citations

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    Cited by:

    1. Richard T. Carson & W. Michael Hanemann, & Raymond J. Kopp & Jon A. Krosnick & Robert C. Mitchell & Stanley Presser & Paul A. Rudd & V. Kerry Smith & Michael Conaway & Kerry Martin, 1997. "Temporal Reliability of Estimates from Contingent Valuation," Land Economics, University of Wisconsin Press, vol. 73(2), pages 151-163.
    2. Toshihiro Okubo & Yuta Watabe & Kaori Furuyama, 2016. "Export of Recyclable Materials: Evidence from Japan," Asian Economic Papers, MIT Press, vol. 15(1), pages 134-148, Winter/Sp.
    3. Forslid, Rikard & Okubo, Toshihiro & Ulltveit-Moe, Karen-Helene, 2011. "Why are firms that export cleaner? International trade and CO2 emissions," CEPR Discussion Papers 8583, C.E.P.R. Discussion Papers.
    4. Ciriaci, Daria & Palma, Daniela, 2010. "Geography, environmental efficiency and Italian economic growth: a spatially-adapted Environmental Kuznets Curve," MPRA Paper 22899, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • 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
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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