Competition in regional environmental policies when plant locations are endogenous

Mixed Oligopoly and Environmental Policy

“…This literature does not assume explicitly that firms pollute the environment and, thus, the environmental policy of the government is not taken into account when deciding whether to privatize the public firm or not. On the other hand, the literature on the environment analyzes the environmental policy of the government but does not consider that there are public firms competing with private firms in the product market (see Barret, 1994;Markusen et al, 1995Markusen et al, , 1997Ulph, 1996). The purpose of this paper is to analyze the decision by the government to privatize a public firm when it cares about the environment by choosing an environmental standard to control pollution.…”

Is there an environmental benefit to being an exporter? Evidence from firm-level data

“…With this in mind, most of the attention has concentrated on foreign direct investment (FDI), plant location, and multinationals' impact on the overall level of environmental standards and pollution. However, more recent theoretic finds the effect is not as straightforward when environmental policy is endogenised (Copeland and Taylor (1994) and Copeland and Taylor (1995)), pollution is local (Markusen et al (1995)), factor endowments are taken into consideration (Copeland and Taylor (1997) and Antweiler et al (2001)), or when governments have other strategic considerations (Barrett (1994)). The empirical evidence has likewise cast doubt on the pollution haven hypothesis.…”

Greenhouse-Gas Emission Controls and Firm Locations in North–South Trade

“…In the framework of an open economy, the first theoretical analysis of the hypothesis is Pethig (1976). Subsequently, Markusen et al (1993Markusen et al ( , 1995 investigated the hypothesis in the presence of foreign direct investment (FDI). In Markusen et al (1993), two polluting firms (one is local to the home country and the other is foreign) choose the number of plants and plant locations when only the home country adopts emission taxes.…”

“…policy differences across countries, firms may relocate from countries with stringent regulations to countries with lax environmental regulations (e.g., Markusen et al, 1993Markusen et al, , 1995Rauscher, 1995;Ulph and Valentini, 2001). This problem may be exacerbated because recent improvements in transportation and communications technology as well as trade liberalization allow firms to relocate their plants more easily (Forslid, Okubo and Sanctuary, 2013).…”

“…They are primarily concerned with market structures induced by taxes. In Markusen et al (1995), a single firm decides the plant number and locations when both countries adopt environmental policies non-cooperatively. The governments have an incentive to lower (raise) environmental standards to attract (deter) investment if the benefit from investment is greater (less) than the loss (i.e., the environmental damage).…”