Monday, December 14, 2009

Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?

Another paper to read. How they handle endogeneity is the key to the paper.

Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?

Quiroga, Miguel
Sterner, Thomas
Persson, Martin

Abstract:

We aim to study whether lax environmental regulations induce comparative advantages, causing the least-regulated countries to specialize in polluting industries. The study is based on Trefler and Zhu... more’s (2005) definition of the factor content of trade. For the econometrical analysis, we use a cross-section of 71 countries in 2000 to examine the net exports in the most polluting industries. We try to overcome three weaknesses in the empirical literature: the measurement of environmental endowments or environmental stringency, the possible endogeneity of the explanatory variables, and the influence of the industrial level of aggregation. As a result, we do find some evidence in favor of the pollution-haven effect. The exogeneity of the environmental endowments was rejected in several industries, and we also find that industrial aggregation matters.


ISSN: 1403-2465

3 comments:

Anonymous said...

丫哩不搭..................................................

Environment said...

To regularize some environmental law in the industries we need to have a mutual understanding law, rather then a forcible law for the industries. This is to avoid any kind of resentment among the people.

Marco said...

I am not sure if those countries with lax environmental regulations are signatories of the Kyoto Protocol.

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