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

Fabrice Darrigues () and Jean-Marc Montaud ()
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Fabrice Darrigues: CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour
Jean-Marc Montaud: CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour

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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.

Keywords: Globalization; Geographical Economics; Environmental Economics (search for similar items in EconPapers)
Date: 2011-01
New Economics Papers: this item is included in nep-int
Note: View the original document on HAL open archive server: https://univ-pau.hal.science/hal-01880351v1
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