Transboundary Movements of Waste
University of Ottawa Department of Economics Working Paper No. 1006E
18 Pages Posted: 12 Sep 2010
Date Written: August 15, 2010
In a stylized model of international trade, a monopolist in the North exports second-hand products to a representative firm in the South to be reused as intermediate goods, with potential trade gains. The degree of reusability of waste products is a crucial choice variable in the North. This is because with a lack of international vigilance, non-reusable waste can be mixed illegally with the reusable waste. I explore the driving forces for the movement of illegal waste, paying particular attention to the role of local waste regulations, such as the EU's Waste Electrical and Electronic Equipment directive. Under mild conditions, it is shown that increased regulation stringency in the North leads its firm to reduce the degree of reusability of its products. As a result, the flow of non-reusable waste to the South increases, providing another channel for the Pollution Haven Hypothesis.
Keywords: Second-Hand Products, Illegal Waste, Environmental Regulation, Trade
JEL Classification: F18, L10, O20, Q53
Suggested Citation: Suggested Citation