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Environmental regulation and the location of polluting industries

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  • Rauscher, Michael

Abstract

Does international tax competition in the environmental field lead to undesirably low levels of environmental regulation and to unacceptable disruptions of environmental quality? The paper tries to answer this question in a non-competitive partial-equilibrium framework. There is one firm that wishes to establish a plant in one of n countries. The paper shows that tax competition may lead to emission taxes that are either too low or too high. They may be so high that the investment is not undertaken although this would be optimal if the countries cooperated. On the other end of the spectrum, a scenario in which taxes are driven to zero becomes possible if there are substantial transfrontier pollution effects.

Suggested Citation

  • Rauscher, Michael, 1994. "Environmental regulation and the location of polluting industries," Kiel Working Papers 639, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:639
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    References listed on IDEAS

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    Cited by:

    1. Shu-Chen Chang, 2015. "The effects of trade liberalization on environmental degradation," Quality & Quantity: International Journal of Methodology, Springer, vol. 49(1), pages 235-253, January.
    2. Markusen, James R., 1997. "Costly pollution abatement, competitiveness and plant location decisions," Resource and Energy Economics, Elsevier, vol. 19(4), pages 299-320, November.
    3. Ngo Van Long & Antoine Soubeyran & Ngo Van Long & Antoine Soubeyran, 1999. "Pollution, Pigouvian taxes and asymmetric international oligopoly," Chapters, in: Emmanuel Petrakis & Eftichios S. Sartzetakis & Anastasios Xepapadeas (ed.), Environmental Regulation and Market Power, chapter 9, pages 175-194, Edward Elgar Publishing.
    4. Ngo Long & Antoine Soubeyran, 2005. "Selective penalization of polluters: an inf-convolution approach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 25(2), pages 421-454, February.
    5. Tanguay, Georges A. & Marceau, Nicolas, 2001. "Centralized versus decentralized taxation of mobile polluting firms," Resource and Energy Economics, Elsevier, vol. 23(4), pages 327-341, October.
    6. Ngo Van Long & Antoine Soubeyran, 2001. "Emission Taxes and Standards for an Asymmetric Oligopoly," CIRANO Working Papers 2001s-07, CIRANO.
    7. Anriquez, Gustavo, 2002. "Trade And The Environment: An Economic Literature Survey," Working Papers 28598, University of Maryland, Department of Agricultural and Resource Economics.

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