Pollution Havens and the Regulation of Multinationals with Asymmetric Information
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Xiaodong Wu
Abstract
This paper develops a common agency model to analyze the strategic interaction between governments in regulating polluting multinationals. We show that when a firm has private information about its production technology relating output to pollution that is difficult to monitor, the information rent extraction behavior of non-cooperative governments will work against the "pollution haven" hypothesis in a Nash equilibrium with or without pooling. The "pollution haven" result is more likely to be reversed in a separating equilibrium than in a pooling equilibrium as a firm's output is further away from the most efficient outcome. This result provides an explanation for why many empirical studies do not support the "pollution haven" hypothesis even after controlling for private non-environmental cost differentials.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
Artikel in diesem Heft
- Advances Article
- 10.2202/1538-0637.1215
- 10.2202/1538-0637.1204
- 10.2202/1538-0637.1318
- 10.2202/1538-0637.1288
- 10.2202/1538-0637.1331
- 10.2202/1538-0637.1330
- 10.2202/1538-0637.1344
- 10.2202/1538-0637.1408
- Contributions Article
- Pollution Havens and the Regulation of Multinationals with Asymmetric Information
- Does Trade Promote Environmental Coordination?: Pollution in International Rivers
- Environmental Policy, Population Dynamics and Agglomeration
- Cross-Country Policy Harmonization with Rent-Seeking
- Environmental Regulation and International Trade: Empirical Results for Germany, the Netherlands and the US, 1977-1992
- Pollution Abatement Expenditure by U.S. Manufacturing Plants: Do Community Characteristics Matter?
- Environmental Regulation as Export Promotion: Product Standards for Dirty Intermediate Goods
- Pollution Havens and Foreign Direct Investment: Dirty Secret or Popular Myth?
Artikel in diesem Heft
- Advances Article
- 10.2202/1538-0637.1215
- 10.2202/1538-0637.1204
- 10.2202/1538-0637.1318
- 10.2202/1538-0637.1288
- 10.2202/1538-0637.1331
- 10.2202/1538-0637.1330
- 10.2202/1538-0637.1344
- 10.2202/1538-0637.1408
- Contributions Article
- Pollution Havens and the Regulation of Multinationals with Asymmetric Information
- Does Trade Promote Environmental Coordination?: Pollution in International Rivers
- Environmental Policy, Population Dynamics and Agglomeration
- Cross-Country Policy Harmonization with Rent-Seeking
- Environmental Regulation and International Trade: Empirical Results for Germany, the Netherlands and the US, 1977-1992
- Pollution Abatement Expenditure by U.S. Manufacturing Plants: Do Community Characteristics Matter?
- Environmental Regulation as Export Promotion: Product Standards for Dirty Intermediate Goods
- Pollution Havens and Foreign Direct Investment: Dirty Secret or Popular Myth?
