Sources of Comparative Advantage in Polluting Industries

64 Pages Posted: 28 Sep 2012

See all articles by Vasco M. Carvalho

Vasco M. Carvalho

Universitat Pompeu Fabra/CREI; Centre for Economic Policy Research (CEPR); University of Cambridge

Fernando Broner

CREI; Barcelona GSE; Universitat Pompeu Fabra; CEPR

Paula Bustos

CREI; Universitat Pompeu Fabra; Barcelona GSE

Multiple version iconThere are 2 versions of this paper

Date Written: September 2012

Abstract

We study the determinants of comparative advantage in polluting industries. We combine data on environmental policy at the country level with data on pollution intensity at the industry level to show that countries with laxer environmental regulation have a comparative advantage in polluting industries. Further, we address the potential problem of reverse causality. We propose an instrument for environmental regulation based on meteorological determinants of pollution dispersion identified by the atmospheric pollution literature. We find that the effect of environmental regulation on the pattern of trade is causal and comparable in magnitude to the effect of physical and human capital.

Keywords: air pollution, comparative advantage, environmental regulation, international trade

JEL Classification: F11, F18, Q53, Q56

Suggested Citation

Carvalho, Vasco M. and Broner, Fernando and Bustos, Paula, Sources of Comparative Advantage in Polluting Industries (September 2012). CEPR Discussion Paper No. DP9111, Available at SSRN: https://ssrn.com/abstract=2153492

Vasco M. Carvalho

Universitat Pompeu Fabra/CREI ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

HOME PAGE: http://www.crei.cat/people/carvalho/welcome.html

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

Fernando Broner (Contact Author)

CREI ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain
+34 93 542 2601 (Phone)

HOME PAGE: http://www.crei.cat/people/broner

Barcelona GSE

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
+34 93 542 2601 (Phone)

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain
+34 93 542 2601 (Phone)

HOME PAGE: http://www.crei.cat/people/broner

CEPR ( email )

London
United Kingdom
+34 93 542 2601 (Phone)

Paula Bustos

CREI; Universitat Pompeu Fabra ( email )

Barcelona GSE ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

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