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Trade liberalization, environmental regulation and self-regulation of multinational firms

Author

Listed:
  • Fabrice DARRIGUES
  • Jean-Marc MONTAUD

Abstract

Using a monopolistic competition model with mobile capital, where firms may choose between a “dirty†or a “clean†technology, this work explores the relationship between environment, trade liberalization, geographical and technical choices of multinational firms. We show that beside of environmental regulation, the ecological sensitivity of consumers can also be a market mechanism which may urge firms to self-regulate. We show in particular that a local sensitivity of environmental issues amplifies the phenomenon of Pollution Haven induced by an environmental tax, while a more comprehensive environmental awareness attenuates or cancels it gradually as the liberalization progresses.

Suggested Citation

  • Fabrice DARRIGUES & Jean-Marc MONTAUD, 2010. "Trade liberalization, environmental regulation and self-regulation of multinational firms," Working Papers 2010-2011_5, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Nov 2010.
  • Handle: RePEc:tac:wpaper:2010-2011_5
    as

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    File URL: http://gtl.univ-pau.fr/travaux/128F_2010_2011_5DocWcattTradeLiberalizationEnvironmentalRegulationMultinationalFirmsFDarriguesJMMontaud.pdf
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    References listed on IDEAS

    as
    1. 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, February.
    2. Zeng, Dao-Zhi & Zhao, Laixun, 2009. "Pollution havens and industrial agglomeration," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 141-153, September.
    3. Olivier Beaumais & Katheline Schubert, 1999. "La modélisation en équilibre général calculable [Un regard sur les interactions économie/environnement ]," Économie rurale, Programme National Persée, vol. 251(1), pages 25-32.
    4. Anton, W.R.Q.Wilma Rose Q. & Deltas, George & Khanna, Madhu, 2004. "Incentives for environmental self-regulation and implications for environmental performance," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 632-654, July.
    5. repec:wsi:wschap:9789813141094_0009 is not listed on IDEAS
    6. Judith M. Dean & Mary E. Lovely & Hua Wang, 2017. "Are foreign investors attracted to weak environmental regulations? Evaluating the evidence from China," World Scientific Book Chapters,in: International Economic Integration and Domestic Performance, chapter 9, pages 155-167 World Scientific Publishing Co. Pte. Ltd..
    7. Eskeland, Gunnar S. & Harrison, Ann E., 2003. "Moving to greener pastures? Multinationals and the pollution haven hypothesis," Journal of Development Economics, Elsevier, vol. 70(1), pages 1-23, February.
    8. Ulrich Wagner & Christopher Timmins, 2009. "Agglomeration Effects in Foreign Direct Investment and the Pollution Haven Hypothesis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(2), pages 231-256, June.
    9. Cole, Matthew A. & Elliott, Robert J. R., 2003. "Determining the trade-environment composition effect: the role of capital, labor and environmental regulations," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 363-383, November.
    10. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001. "Is Free Trade Good for the Environment?," American Economic Review, American Economic Association, vol. 91(4), pages 877-908, September.
    11. Graham, David & Woods, Ngaire, 2006. "Making corporate self-regulation effective in developing countries," World Development, Elsevier, vol. 34(5), pages 868-883, May.
    12. Petra Christmann & Glen Taylor, 2001. "Globalization and the Environment: Determinants of Firm Self-Regulation in China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(3), pages 439-458, September.
    13. Ron Boschma, 2005. "Proximity and Innovation: A Critical Assessment," Regional Studies, Taylor & Francis Journals, vol. 39(1), pages 61-74.
    14. Sébastien Raspiller & Nicolas Riedinger, 2008. "Do Environmental Regulations Influence the Location Behavior of French Firms?," Land Economics, University of Wisconsin Press, vol. 84(3), pages 382-395.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Globalization; Geographical Economics; Environmental Economics;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • 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

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