Developing Country Second-Mover Advantage in Competition over Environmental Standards and Taxes

Valeska Groenert (), Myrna Wooders and Benjamin Zissimos
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Valeska Groenert: Universitat Aut�noma de Barcelona

No 1012, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

Abstract: We show that, in competition between a developed country and a developing country over environmental standards and taxes, the developing country may have a 'second- mover advantage.' In our model, firms do not unanimously prefer lower environmental- standard levels. We introduce this feature to an otherwise familiar model of fiscal competi- tion. Four distinct outcomes can be characterized by varying the marginal cost to firms of an environmental externality: (1) the outcome may be efficient; (2) the developing country may be a 'pollution haven;' a place to escape excessively high environmental standards in the developed country; (3) the developing country may 'undercut' the developed country and attract all firms; (4) the developed country may be a pollution haven.

Keywords: Environmental standards; fiscal competition; second mover advantage; tax competition. (search for similar items in EconPapers)
JEL-codes: H2 H3 Q2 (search for similar items in EconPapers)
Date: 2010-10
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http://www.accessecon.com/pubs/VUECON/vu10-w12R.pdf Revised version, October 2010 (application/pdf)

Related works:
Journal Article: Developing Country Second-Mover Advantage in Competition Over Environmental Standards and Taxes (2013)
Working Paper: Developing Country Second-Mover Advantage in Competition over Environmental Standards and Taxes (2011)
Working Paper: Developing Country Second-Mover Advantage in Competition over Environmental Standards and Taxes (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:van:wpaper:1012

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