Environmental regulation and international trade: Empirical results for Germany, the Netherlands and the US, 1977-1992

Abay Mulatu, Raymond J.G.M. Florax, Cees Withagen

Research output: Contribution to journalArticle

17 Citations (Scopus)

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 relatively less stringent. 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.

Original languageEnglish
Article number5
Pages (from-to)1-33
Number of pages34
JournalContributions to Economic Analysis and Policy
Volume3
Issue number2
DOIs
Publication statusPublished - 1 Dec 2004
Externally publishedYes

Keywords

  • Competitiveness
  • Pollution Haven
  • Trade

ASJC Scopus subject areas

  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)

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