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Polluting firms' location choices and pollution havens in an R&D-based growth model for an international emissions trading market

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  • Yoshihiro Hamaguchi

Abstract

We investigate the effect of grandfathered permit allocation and abatement productivity for carbon emissions on growth rate, firms' location choices, foreign direct investment, and total pollution in an agglomeration model with innovation. We consider grandfathered permit allocation as potential rent. We find a distribution effect wherein increasing (decreasing) permit price raises (reduces) firms' rent, thereby stimulating (inhibiting) R $ \& $ &D and the growth rate. Decreasing the permit level (improving abatement productivity) prompts firms to locate from the South (North) to the North (South) in the long run via this effect. Thus, our results imply that improving abatement productivity leads to support of the pollution haven hypothesis.

Suggested Citation

  • Yoshihiro Hamaguchi, 2021. "Polluting firms' location choices and pollution havens in an R&D-based growth model for an international emissions trading market," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 30(4), pages 625-642, May.
    • Handle: RePEc:taf:jitecd:v:30:y:2021:i:4:p:625-642
    DOI: 10.1080/09638199.2021.1889644
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    Cited by:

    1. Abdullah F. Alnaim & Nadia Abdelhamid Abdelmegeed Abdelwahed & Bahadur Ali Soomro, 2022. "Environmental Challenges and Green Innovation Strategy: A Vigorous Development of Greener Dynamics," Sustainability, MDPI, vol. 14(15), pages 1-18, August.
    2. Chui-Yu Chiu & William Tang, 2022. "Measuring the Operational Efficiency and the Water Resources Management Efficiency for Industrial Parks: Empirical Study of Industrial Parks in Taiwan," Sustainability, MDPI, vol. 14(21), pages 1-22, October.
    3. Sa Xu & Cunyi Yang & Zhehao Huang & Pierre Failler, 2022. "Interaction between Digital Economy and Environmental Pollution: New Evidence from a Spatial Perspective," IJERPH, MDPI, vol. 19(9), pages 1-23, April.
    4. Xiaoxiang Xu & Mingqiu Liao, 2022. "Prediction of China’s Economic Structural Changes under Carbon Emission Constraints: Based on the Linear Programming Input–Output (LP-IO) Model," Sustainability, MDPI, vol. 14(15), pages 1-13, July.
    5. Yoshihiro Hamaguchi, 2024. "Whether to Abolish or Introduce Dual Regulation as Trade and Environmental Policy?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 32(1), pages 57-95, January.
    6. Mo Du & Shanglei Chai & Shu Li & Zejing Sun, 2022. "How Environmental Regulation Affects Green Investment of Heavily Polluting Enterprises: Evidence from Steel and Chemical Industries in China," Sustainability, MDPI, vol. 14(19), pages 1-14, September.

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