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The pollution haven hypothesis: a geographic economy model in a comparative study

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Abstract

Although based on theoretical foundations, the pollution haven hypothesis stating that heterogenous environmental regulations between countries influence multinational firms' location decisions, has never been clearly proven empirically. In this study, we reexamine this hypothesis by a fresh take on both its theoretical and empirical aspects. While applying a geographic economy model on French firm-level data, we confirm the pollution haven hypothesis for a global sample. Through sensitivity analysis, we validate it for Central and Eastern European countries, emerging and high-income OECD countries, but not for the major part of the Commonwealth of Independent States countries. Finally, we show that the pollution haven hypothesis is confirmed in the strongest manner for emerging economies

Suggested Citation

  • Sonia Ben Kheder & Natalia Zugravu, 2008. "The pollution haven hypothesis: a geographic economy model in a comparative study," Documents de travail du Centre d'Economie de la Sorbonne v08083, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:v08083
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    Cited by:

    1. Xu Wang & Liyan Han & Libo Yin, 2016. "Environmental Efficiency and Its Determinants for Manufacturing in China," Sustainability, MDPI, vol. 9(1), pages 1-18, December.
    2. John Feddersen, 2012. "Why we can't confirm the pollution haven hypothesis: A model of carbon leakage with agglomeration," Economics Series Working Papers 613, University of Oxford, Department of Economics.
    3. Matthew Panhans & Lucia Lavric & Nick Hanley, 2017. "The Effects of Electricity Costs on Firm Re-location Decisions: Insights for the Pollution Havens Hypothesis?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(4), pages 893-914, December.
    4. Xiang Cai & Wang Dan & Dongming Ge & Xiaohui Zhao & Yihui Wang, 2025. "The impact of environmental regulations and government subsidies and their policy mix on clean technology innovation," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(1), pages 1987-2023, January.
    5. Ilker Akar, 2019. "The Pollution Haven Hypothesis and Foreign Trade - A Survey on the Relation with Environment," Economics Literature, WERI-World Economic Research Institute, vol. 1(1), pages 37-50, June.
    6. Wenjuan Tu & Rui Shi, 2022. "Influence of Environmental Regulation on the International Competitiveness of the High-Tech Industry: Evidence from China," Sustainability, MDPI, vol. 15(1), pages 1-15, December.
    7. Qirjo, Dhimitri & Pascalau, Razvan & Krichevskiy, Dmitriy, 2019. "CETA and Air Pollution," MPRA Paper 95608, University Library of Munich, Germany.
    8. Jing Tang & Shilong Li, 2022. "How Do Environmental Regulation and Environmental Decentralization Affect Regional Green Innovation? Empirical Research from China," IJERPH, MDPI, vol. 19(12), pages 1-16, June.
    9. Xing Yao & Rizwana Yasmeen & Yunong Li & Muhammad Hafeez & Ihtsham Ul Haq Padda, 2019. "Free Trade Agreements and Environment for Sustainable Development: A Gravity Model Analysis," Sustainability, MDPI, vol. 11(3), pages 1-17, January.
    10. Xinping Li & Qiongxia Qin & Yongliang Yang, 2023. "The Impact of Green Innovation on Carbon Emissions: Evidence from the Construction Sector in China," Energies, MDPI, vol. 16(11), pages 1-23, June.
    11. Quaas, Martin F. & Smulders, Sjak, 2008. "Pollution and the Efficiency of Urban Growth," Sustainability Indicators and Environmental Valuation Working Papers 44225, Fondazione Eni Enrico Mattei (FEEM).
    12. Bowen Li & Antonio Alleyne & Zhaoyong Zhang & Yifei Mu, 2021. "Sustainability and Waste Imports in China: Pollution Haven or Resources Hunting," Sustainability, MDPI, vol. 13(2), pages 1-21, January.
    13. Kyriakopoulou, Efthymia & Xepapadeas, Anastasios, 2009. "Environmental Policy, Spatial Spillovers and the Emergence of Economic Agglomerations," Sustainable Development Papers 54289, Fondazione Eni Enrico Mattei (FEEM).
    14. Zhang, Chunhong & Liu, Haiying & Bressers, Hans Th.A. & Buchanan, Karen S., 2011. "Productivity growth and environmental regulations - accounting for undesirable outputs: Analysis of China's thirty provincial regions using the Malmquist–Luenberger index," Ecological Economics, Elsevier, vol. 70(12), pages 2369-2379.
    15. Yanwei Lyu & Jinning Zhang & Fei Yang & Di Wu, 2022. "The “Local Neighborhood” Effect of Environmental Regulation on Green Innovation Efficiency: Evidence from China," IJERPH, MDPI, vol. 19(16), pages 1-20, August.
    16. Ke Li & Boqiang Lin & Xiying Liu, 2015. "Special: Theme of Clean Coal How Policy Strategies Affect Clean Coal Technology Innovation in China? A Patent-Based Approach," Energy & Environment, , vol. 26(6-7), pages 1015-1033, November.
    17. Abdelmohsen A. Nassani & Muhammad Moinuddin Qazi Abro & Rubeena Batool & Syed Haider Ali Shah & Shabir Hyder & Khalid Zaman, 2021. "Go‐for‐green policies: The role of finance and trade for sustainable development," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 1409-1423, January.
    18. Pinjie Xie & Yue Lu & Yuwen Xie, 2024. "The Influencing Factors of Carbon Emissions in the Industrial Sector: Empirical Analysis Based on a Spatial Econometric Model," Sustainability, MDPI, vol. 16(6), pages 1-24, March.
    19. Zhang, Zengkai & Zhu, Kunfu & Hewings, Geoffrey J.D., 2017. "A multi-regional input–output analysis of the pollution haven hypothesis from the perspective of global production fragmentation," Energy Economics, Elsevier, vol. 64(C), pages 13-23.
    20. Youbin Zhu & Hui Hou & Minglang Zhang & Shilin Hou, 2025. "Analysis of spatial correlation characteristics and key factors of regional environmental governance efficiency in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(2), pages 3989-4016, February.

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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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