Trade liberalization, environmental regulation and self-regulation of multinational firms
Using a monopolistic competition model with mobile capital, where firms may choose between a â€œdirtyâ€ or a â€œcleanâ€ 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.
|Date of creation:||Nov 2010|
|Date of revision:||Nov 2010|
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