Relative stringency of environmental regulation and international competitiveness

PhD Thesis# 332
Author:
Dr. Abay (A.) Mulatu
Supervisor(s):
prof.dr. C.A.A.M. Withagen, dr. R.J.G.M. Florax
Date:
2004-01-29

Abstract

With interdependence among world economies on the increase, apprehension about the potential loss of the international competitiveness of the domestic industry has frequently clouded unilateral and multilateral environmental policymaking. Conversely, further trade liberalization efforts have become more complicated because of differential domestic environmental standards across countries, which are assumed to tip competitive advantage in favor of those firms that operate in countries with relatively lower environmental standards. This dissertation deals with two related questions that are at the heart of the various issues in trade and the environmental linkages: Does ambitious environmental regulation impair the competitiveness of the domestic industry? And, do social planners have incentives to set 'over-lax' environmental regulation to enhance the competitiveness of the domestic industry? It starts by probing into the central concepts underlying these questions: international competitiveness and relative stringency of environmental regulation. The two questions are then addressed both theoretically, using a general equilibrium model, and empirically, using data from Germany, the Netherlands and the US.

Publisher of the TI-theses is: Rozenberg Publishing Services