Are multinationals flocking to pollution havens in developing countries? Using data from four developing countries (Cote d'Ivoire, Mexico, Morocco, and Venezuela), the authors examine the pattern of foreign investment. They find almost no evidence that foreign investors are concentrated in dirty...

In this paper, we disentangle the sources of public sector inefficiency using 1981-1995 panel data on manufacturing firms in Indonesia. We consider two leading hypotheses: (1) public sector enterprises are inefficient due to agency-type problems or (2) public sector enterprises are inefficient...

Tradable permits are celebrated as a political instrument since they allow (i) firms to equalize marginal abatement costs through trade and (ii) the government to distribute the burden of the policy in a politically fair and feasible way. These two concerns, however, conflict in a dynamic...

India is among the world lowest per capita greenhouse gas (GHG) emitters, but rapid increases are expected. At the same time, World Health Organization (WHO) estimates show that 424,000 die prematurely in Indian households each year from air pollution exposure due to solid fuel use. We analyze...

Permits markets are celebrated as a policy instrument since they allow (i) firms to equalize marginal costs through trade and (ii) the regulator to distribute the burden in a politically desirable way. These two concerns, however, may conflict in a dynamic setting. Anticipating the regulator's...

In many parts of the world, lower levels of government are taking over responsibilities from national authorities. This often leads to difficulty in maintaining fiscal discipline. So-called soft budget constraints allow these subnational governments to expand expenditures without facing the full...

Emission reductions could be provided by cleaner technologies as well as substitution towards less polluting inputs and goods. We develop a model to assess the scope for emission reductions by input substitution. We then apply the model to manufacturing in Chile and Indonesia-two developing...