Shadow prices, environmental stringency, and international competitiveness

Tim Jeppesen, John List and Daan van Soest

Natural Field Experiments from The Field Experiments Website

Abstract: Empirical tests of the relationship between international competitiveness and the severity of environmental regulations are hampered by the lack of pollution abatement cost data for non-U.S. countries. The theory of the firm suggests that environmental stringency can be measured by the difference between a polluting input's shadow price and its market price. We make a first attempt at quantifying such a measure for two industries located in nine European OECD countries. Overall, we provide (i) a new approach to measure cross-country regulatory differences in that we use a theoretically attractive measure of industry-specific private compliance cost, and (ii) empirical estimates that are an attractive tool for researchers and policymakers who are interested in examining how economic activity is influenced by compliance costs.

Date: 2006
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Citations: View citations in EconPapers (42)

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Journal Article: Shadow prices, environmental stringency, and international competitiveness (2006)
Working Paper: Shadow prices, environmental stringency and international competitiveness (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:feb:natura:00484

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