Developing Country Second-Mover Advantage in Competition Over Standards and Taxes

Valeska Groenert (), Myrna Wooders and Benjamin Zissimos
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Valeska Groenert: Department of Economics, Vanderbilt University

No 909, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

Abstract: We show that, in competition between a developed country and a developing country over environmental standards and taxes, the developing country may have a 'second-mover advantage.' In our model, firms do not unanimously prefer lower environmental-standard levels. We introduce this feature to an otherwise familiar model of fiscal competition. Three distinct outcomes can be characterized by varying the cost to firms of 'standard mismatch': (1) the outcome may be efficient; (2) the developing country may be a 'pollution haven,' where some firms escape excessively high environmental standards in the developed country; (3) environmental standards may be set excessively high.

Keywords: Environmental standards; fiscal competition; second-mover advantage; tax competition (search for similar items in EconPapers)
JEL-codes: H2 H3 Q2 (search for similar items in EconPapers)
Date: 2009-07
New Economics Papers: this item is included in nep-dev and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:van:wpaper:0909

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