Environmental Regulation and International Trade

Abay Mulatu, Raymond Florax and Cees Withagen

No 04-020/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We empirically investigate the responsiveness of international trade to the stringency of environmental regulation. Stringent environmental regulation may impair the export competitiveness of ‘dirty’ domestic industries, and as a result, ‘pollution havens’ emerge in countries where environmental regulation is ‘over-lax.’ We examine the impact of pollution abatement and control costs on net exports in order to grasp this phenomenon. Theoretically, our analysis is related to a general equilibrium model of trade and pollution nesting the pollution haven motive for trade with the factor endowment motive. We analyze data on two-digit ISIC manufacturing industries during the period 1977–1992 in Germany, the Netherlands and the US, and show that trade patterns in ‘dirty’ commodities are jointly determined by relative factor endowments and environmental stringency differentials.

Keywords: Trade; competitiveness; environmental policy; pollution abatement; pollution haven (search for similar items in EconPapers)
JEL-codes: F14 L50 Q28 (search for similar items in EconPapers)
Date: 2004-02-17
References: Add references at CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
https://papers.tinbergen.nl/04020.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:tin:wpaper:20040020

Access Statistics for this paper

More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().