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Environmental regulation, multinational companies and international competitiveness

Environmental regulation, multinational companies and international competitiveness
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 dumping”) 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 flight”, 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.
plant location, environmental policy, eco-dumping, competition
37
University of Southampton
Ulph, Alistair
82a2f3b8-ac72-4d0e-85cc-2760eb99b117
Valentini, Laura
b0d5cc1e-5566-4a82-8c19-2a43166c8cbd
Ulph, Alistair
82a2f3b8-ac72-4d0e-85cc-2760eb99b117
Valentini, Laura
b0d5cc1e-5566-4a82-8c19-2a43166c8cbd

Ulph, Alistair and Valentini, Laura (2000) Environmental regulation, multinational companies and international competitiveness (Discussion Papers in Economics and Econometrics, 37) Southampton, UK. University of Southampton 30pp.

Record type: Monograph (Discussion Paper)

Abstract

Concerns have been expressed that in a global market place with mobile capital, national governments will have incentives to set weak environmental policies (“environmental dumping”) 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 flight”, 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.

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More information

Published date: 2000
Additional Information: JEL Classification: F1, H4, L5, Q2
Keywords: plant location, environmental policy, eco-dumping, competition

Identifiers

Local EPrints ID: 33135
URI: http://eprints.soton.ac.uk/id/eprint/33135
PURE UUID: f13147db-a74a-4ced-98fa-9b432f2df078

Catalogue record

Date deposited: 19 Jul 2006
Last modified: 15 Mar 2024 07:42

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Contributors

Author: Alistair Ulph
Author: Laura Valentini

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