Trade, Technology, and the Environment: Why Have Poor Countries Regulated Sooner?

Mary Lovely and David Popp

No 14286, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Countries who adopted regulation of coal-fired power plants after 1980 generally did so at a much lower level of per-capita income than did early adopters -- poor countries regulated sooner. This phenomenon suggests that pioneering adopters of environmental regulation provide an advantage to countries adopting these regulations later, presumably through advances in technology made by these first adopters. Focusing specifically on regulation of coal-fired power plants, we ask to what extent the availability of new technology influences the adoption of new environmental regulation. We build a general equilibrium model of an open economy to identify the political-economy determinants of the decision to regulate emissions. Using a newly-created data set of SO2 and NOX regulations for coal-fired power plants and a patent-based measure of the technology frontier, we test the model's predictions using a hazard regression of the diffusion of environmental regulation across countries. Our findings support the hypothesis that international economic integration eases access to environmentally friendly technologies and leads to earlier adoption, ceteris paribus, of regulation in developing countries. By limiting firms' ability to burden shift, however, openness may raise opposition to regulation. Our results suggest that domestic trade protection allows costs to be shifted to domestic consumers while large countries can shift costs to foreign consumers, raising the likelihood of adoption. Other political economy factors, such as the quality of domestic coal and election years, are also important determinants.

JEL-codes: F18 O33 Q53 Q55 Q56 Q58 (search for similar items in EconPapers)
Date: 2008-08
New Economics Papers: this item is included in nep-env, nep-int, nep-pol and nep-reg
Note: EEE PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published as “Trade, Technology, and the Environment: Does Access to Technology Promote Environmental Regulation,” Journal of Environmental Economics and Management, January 2011, 61(1), 16-35 , (with Mary Lovely).

Downloads: (external link)
http://www.nber.org/papers/w14286.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:14286

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w14286

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().