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International environmental outsourcing

Matthew Cole (), Robert Elliott () and Toshihiro Okubo ()

Review of World Economics (Weltwirtschaftliches Archiv), 2014, vol. 150, issue 4, 639-664

Abstract: In recent years there has been a dramatic increase in the number of firms shifting stages of their production processes overseas. In this paper we investigate whether firms outsource the dirtier stages of production to minimise domestic environmental regulation costs—a process broadly consistent with the pollution haven hypothesis. We develop a theoretical model of international environmental outsourcing that focuses on the roles played by firm size and productivity, transport costs and environmental regulations. We test the model’s predictions using a firm-level dataset for Japan and do find evidence of an ‘environmental outsourcing’ effect. Copyright Kiel Institute 2014

Keywords: Environmental regulations; Trade; Outsourcing; Firm level; F18; F23; L51; L60; Q56; R3 (search for similar items in EconPapers)
Date: 2014
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