Trade pessimists vs technology optimists : induced technical change and pollution havens

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Title: Trade pessimists vs technology optimists : induced technical change and pollution havens
Authors: Di Maria, Corrado
Smulders, Sjak
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Date: 2004
Abstract: Our paper focuses on the role of endogenous technology and technology spillovers in explaining cross country differences in pollution and the pollution haven effect of international trade. In our North-South trade model, technology is endogenously developed by the North and imitated by the South. Environmental regulators choose national environmental policies by trading off the income gains and the disutility from a rise in pollution. Differences in environmental stringency are entirely driven by differences in investment opportunities and distortions that follow from the difference in intellectual property rights protection. We show that without goods trade and in the absence of technology subsidies, the North imposes more stringent environmental regulation than the South. When opening up to trade, the South experiences a rise in prices for pollution-intensive goods and tends to raise pollution as in a standard trade model. Induced technical change, however, may reverse this pollution haven effect.
Type of material: Journal Article
Publisher: Berkeley Electronic Press
Journal: The B.E. Journal of Economic Analysis & Policy (Advances)
Volume: 4
Issue: 2
Copyright (published version): Copyright 2004 by the authors
Keywords: Pollution havensEndogenous technical changeInternational trade
Subject LCSH: Technological innovations
Pollution--Economic aspects
International trade
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Language: en
Status of Item: Peer reviewed
Appears in Collections:Architecture, Planning and Environmental Policy Research Collection

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