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Trade Liberalization, Consumption Shifting and Pollution: Evidence from Mexico's Used Vehicle Imports

Author

Listed:
  • Chen Liang
  • Garcia-Medina Cecilia
  • Wan Rui

Abstract

This paper develops a model of used vehicle trade between countries with different environmental regulations regarding vehicle emissions. We show that the US, given its strict environmental regulations, has incentives to export used vehicles to Mexico, which impacts air pollution emissions caused by automobile driving in Mexico. Using a unique database on vehicle registration in Mexico and imports after the NAFTA enactment, we find that Mexico's used vehicle imports reduced average pollution emissions generated by vehicles, mainly due to the "technique effect" -differences in emissions of vehicles of comparable model and age between those that operate in the US before being imported (that emit less pollutants) and those operating in Mexico.

Suggested Citation

  • Chen Liang & Garcia-Medina Cecilia & Wan Rui, 2022. "Trade Liberalization, Consumption Shifting and Pollution: Evidence from Mexico's Used Vehicle Imports," Working Papers 2022-02, Banco de México.
    • Handle: RePEc:bdm:wpaper:2022-02
    as

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    File URL: https://www.banxico.org.mx/publications-and-press/banco-de-mexico-working-papers/%7B22082678-B986-55B8-619B-786A5FDD4B52%7D.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Trade Liberalization; Used Vehicles; Pollution Emissions; Technique Effect;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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