Trade pessimists vs technology optimists: Induced technical change and pollution havens
Smulders,Sjak di Maria,C.
Smulders,Sjak
di Maria,C.
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.
Description
Date
2004
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
Organizational Units
Journal Issue
Keywords
pollution havens, endogenous technical change, international trade
Citation
Smulders, S & di Maria, C 2004, 'Trade pessimists vs technology optimists: Induced technical change and pollution havens', Advances in economic analysis & policy, vol. 3, no. 2, 7. https://doi.org/10.2202/1538-0637.1344.