Environmental policy and industrial competitiveness: The pollution haven hypothesis reconsidered

Rolf Bommer

No 262, Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy"

Abstract: The Pollution-Haven Hypothesis suggests that tight environmental standards reduce domestic producers' competitiveness and give rise to their relocating to countries with more lenient standards. This paper questions that relocation is always caused by reduced competitiveness at home. By using a signaling approach, I show that relocation can be undertaken for purely strategic reasons. Relocation is the producer's tool to convince the policy maker to refrain from a further tightening of environmental control. I show that trade liberalization increases probability of strategic relocation.

Keywords: environmental policy; trade liberalization; industrial competitiveness; international political economy; signaling (search for similar items in EconPapers)
JEL-codes: D78 F13 F15 (search for similar items in EconPapers)
Date: 1995
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:kondp2:262

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