Environmental regulation, multinational companies and international competitiveness
Concerns have been expressed that in a global market place with mobile capital, national governments will have incentives to set weak environmental policies (“environmental dumpingâ€) to protect the international competitiveness of their domestic firms, that these incentives are particularly strong in industries where plants may be relatively footloose, so that governments are concerned to prevent “capital flightâ€, and that footloose plants are particularly associated with multinational firms. It is then often suggested that appropriate policy responses would be to seek to harmonise environmental regulations or impose minimum standards for environmental regulations. In this paper we set out these concerns in terms of a number of more precisely made claims and then review recent developments in economic analysis (including some of our own work) and empirical evidence to show that the claims cannot be generally sustained and that the suggested policies may be harmful. However, devising more appropriate policies is by no means straightforward. <br><br> Keywords; plant location, environmental policy, eco-dumping, competition <br><br> JEL Classification: F1, H4, L5, Q2
Year of publication: |
2000-01-01
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Authors: | Ulph, Alistair ; Valentini, Laura |
Institutions: | Economics Division, University of Southampton |
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