Environmental Policy and Industrial Competitiveness: The Pollution‐Haven Hypothesis Reconsidered

Abstract

The pollution‐haven hypothesis suggests that strict environmental standards reduce domestic producers’ competitiveness and result in relocation to countries with more lenient standards. This paper examines the question of whether relocation is always caused by reduced competitiveness at home. By using a signaling approach, it is shown that relocation can be undertaken for purely strategic reasons. Relocation is the producer’s tool of indirect rent‐seeking to convince the policymaker to refrain from a further tightening of environmental control. It is also shown that trade liberalization increases the probability of strategic relocation.

Environmental Kuznets Curves in the People’s Republic of China: Turning Points and Regional Differences

“…Among others, trade and investment across regions or nations are two of the most important forces (e.g., Bommer 1999, Harrison 1996, Wheeler 2000. Underdeveloped economies usually have a comparative advantage in producing laborintensive goods that are often more pollution-intensive.…”

Comércio internacional, blocos econômicos e meio-ambiente: uma avaliação de impactos utilizando equilíbrio geral aplicado

“…Argumenta Bommer (1999) que a liberalização comercial per se pode aumentar a probabilidade de ocorrência de realocações industriais estratégicas em virtude do rent-seeking. Bommer (1999) ainda ressalta que as assimetrias informacionais entre regulador e regulado têm sido constantemente negligenciadas nas pesquisas empíricas mas podem desempenhar um papel importante na validação dessa hipótese. Os órgãos reguladores, ao selecionar os padrões ambientais, desconhecem em que medida suas ações afetarão as firmas e, devido à heterogeneidade dessas últimas, a capacidade delas de se adequarem aos padrões mais elevados de exigências ambientais.…”

Does Lax Environmental Regulation Attract FDI When Accounting for 'Third-Country' Effects?

“…Therefore, its focus is on the di¤erence between environment policy instruments across countries and how this a¤ects capital and trade ‡ows (Ederington and Minier (2003), Bommer (1999)). In practice, measuring environmental stringency is the key problem in this literature (van Soest et al (2006)).…”

“…In line with this consideration, we reestimate separately the di¤erent model speci…cations for two subsamples. Table 7 and 8 display the results for FDI to high-income OECD and to non OECD countries 13 , respectively.…”