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Trade liberalization, consumption shifting and pollution: Evidence from Mexico's used vehicle imports

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  • Liang Chen
  • B. Cecilia Garcia‐Medina
  • Rui Wan

Abstract

This paper develops a model of used vehicle trade between the United States and Mexico, countries with different environmental regulations regarding vehicle emissions. We demonstrate that the United States, with its strict environmental regulations, has a motive to export used vehicles to Mexico, which impacts air pollution emissions from vehicle driving in Mexico. Using unique data on the import and registration of vehicles in Mexico after NAFTA, we find that Mexico's used vehicle imports reduce pollution emissions generated from vehicle driving mainly because of the technique effect, that is, model–age‐comparable vehicles imported from the United States emit less than those originally operated in Mexico.

Suggested Citation

  • Liang Chen & B. Cecilia Garcia‐Medina & Rui Wan, 2019. "Trade liberalization, consumption shifting and pollution: Evidence from Mexico's used vehicle imports," Review of International Economics, Wiley Blackwell, vol. 27(5), pages 1591-1608, November.
    • Handle: RePEc:bla:reviec:v:27:y:2019:i:5:p:1591-1608
    DOI: 10.1111/roie.12436
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    Cited by:

    1. Chinazaekpere Nwani & Andrew Adewale Alola & Chimobi Philip Omoke & Bosede Ngozi Adeleye & Festus Victor Bekun, 2022. "Responding to the environmental effects of remittances and trade liberalization in net-importing economies: the role of renewable energy in Sub-Saharan Africa," Economic Change and Restructuring, Springer, vol. 55(4), pages 2631-2661, November.
    2. Liu, Mengdi & Zhang, Bing & Liao, Xianchun, 2022. "Can trade liberalization promote green production? Evidence from China's manufacturing enterprises," Journal of Asian Economics, Elsevier, vol. 79(C).

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