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Trade liberalization, environmental regulation and self-regulation of multinational firms

Fabrice Darrigues and Jean-Marc Montaud ()

Working Papers from CATT - UPPA - Université de Pau et des Pays de l'Adour

Abstract: Using a monopolistic competition model with mobile capital, where firms may choose between a “dirty” or a “clean” technology, this work explores the relationship between environment, trade liberalization, geographical and technical choices of multinational firms. We show that beside of environmental regulation, the ecological sensitivity of consumers can also be a market mechanism which may urge firms to self-regulate. We show in particular that a local sensitivity of environmental issues amplifies the phenomenon of Pollution Haven induced by an environmental tax, while a more comprehensive environmental awareness attenuates or cancels it gradually as the liberalization progresses.

Keywords: Globalization; Geographical Economics; Environmental Economics (search for similar items in EconPapers)
JEL-codes: F12 F15 F23 Q56 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2010-11, Revised 2010-11
New Economics Papers: this item is included in nep-env, nep-int and nep-reg
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