Trade and Environmental Regulations
To what extent do environmental regulations affect trade flows? Early cross-sectional studies of the relationship generally found little effect. More recent research that controls for industry heterogeneity, the endogeneity of trade policy, and the type of trade and industry has found sizeable, statistically significant effects of environmental regulations on trade. There is little evidence, however, that production of ‘dirty’ goods has shifted to countries with lax environmental standards.
KeywordsEnvironmental regulations Footloose industries Pollution haven Trade policy
- Ederington, J., A. Levinson, and J. Minier. 2004. Trade liberalization and pollution havens. Advances in Economic Analysis and Policy 4: 1–22.Google Scholar
- Grossman, G.M., and A.B.. Krueger. 1993. Environmental impacts of a North American free trade agreement. In The Mexico-U.S. Free trade agreement, ed. P.M. Garber. Cambridge, MA: MIT Press.Google Scholar