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Is Environmental Dumping Greater when Plants are Footloose?

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  • Alistair Ulph
  • Laura Valentini

Abstract

We address concerns that globalisation gives national governments incentives to set weak environmental policies and that these incentives are particularly strong in industries where plants are footloose. Using a simple model of imperfect competition, we compare the environmental policies that would be set by non‐cooperative governments for two different move structures—where governments set environmental policies after firms decide where to locate (market share game) and where governments set environmental policies before firms decide where to locate (location game). We show that the extent of environmental dumping in the market share game can be greater than in the location game. JEL classification F1; H4; L5; Q2

Suggested Citation

  • Alistair Ulph & Laura Valentini, 2001. "Is Environmental Dumping Greater when Plants are Footloose?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 673-688, December.
  • Handle: RePEc:bla:scandj:v:103:y:2001:i:4:p:673-688
    DOI: 10.1111/1467-9442.00265
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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • H4 - Public Economics - - Publicly Provided Goods
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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