The pursuit of sustainable development requires balancing the objectives of FDI, Trade, economic growth and environmental protection. Achieving a balance between these often-conflicting priorities is difficult enough at the national level, where competing interests are at least grounded in a common environmental, social and economic context. At the international level, where different countries...

This paper studies the interplay between two groups of countries, large and small, which compete sequentially on corporate taxes environmental regulations to attract imperfectly mobile firms. We show that in general, small countries undercut terms taxes. The choose be both tax pollution havens when they are less concerned about environment than capital integration is low. never act as havens. F...

Theory and intuition tell us that the imposition of stringent environmental policies by a given country will reduce its net exports of commodities produced using pollution-intensive industries. It is therefore surprising that many empirical studies of international commodity trade have failed to …nd evidence of this e¤ect. This study o¤ers a new, highly focused test of the pollution haven hypot...

This paper uses both theory and empirical work to examine the effect of environmental regulations on trade flows. We develop a simple economic model to demonstrate how unobserved heterogeneity, endogeneity and aggregation issues bias measurements of the relationship between regulatory costs and trade. We estimate a reduced-form of the model using data on U.S. regulations and net trade flows amo...

This paper develops a common agency model to analyze the strategic interaction between governments in regulating polluting multinationals. We show that when a firm has private information about its production technology relating output to pollution that is difficult to monitor, the information rent extraction behavior of non-cooperative governments will work against the “pollution haven” hypoth...

Pollution-intensive industries are generally characterized by imperfect competition, increasing returns to scale and large transportation costs. We investigate two countries, N and S, each with two sectors. Manufacturing generates cross-border pollution which reduces agricultural production. Firms can freely move across country borders, but not workers. First, we show that pollution lowers loca...