Strategic Interaction and Institutional Quality Determinants of Environmental Regulations across Select OECD Countries

Gregmar Galinato (ggalinato@wsu.edu) and Hayley Chouinard (hayley.chouinard@colostate.edu)

No 2014-7, Working Papers from School of Economic Sciences, Washington State University

Abstract: We provide a model of environmental regulation to control transboundary pollution while considering the role of neighboring country regulations and measures of the quality of own and neighboring country government institutions. We apply a Spatial Durbin model to identify the determinants of the environmental regulations of several OECD countries. We do not find evidence of strategic interaction as the regulations of a neighbor do not significantly impact the own country regulations. However, the higher the quality of government institutions in a country, the more stringent the implementation of regulations. Additionally, government institutional quality significantly positively impacts the stringency of regulations in neighboring countries indirectly, possibly through technology choices.

Keywords: Environmental regulations; institutions; spatial model; strategic interaction; spillovers (search for similar items in EconPapers)
JEL-codes: H2 Q5 (search for similar items in EconPapers)
Pages: 35 pages
New Economics Papers: this item is included in nep-ene, nep-env, nep-reg and nep-res
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