International environmental outsourcing

Matthew A. Cole, Robert J R Elliott, Toshihiro Okubo

Research output: Contribution to journalArticle

12 Citations (Scopus)

Abstract

In recent years there has been a dramatic increase in the number of firms shifting stages of their production processes overseas. In this paper we investigate whether firms outsource the dirtier stages of production to minimise domestic environmental regulation costs—a process broadly consistent with the pollution haven hypothesis. We develop a theoretical model of international environmental outsourcing that focuses on the roles played by firm size and productivity, transport costs and environmental regulations. We test the model’s predictions using a firm-level dataset for Japan and do find evidence of an ‘environmental outsourcing’ effect.

Original languageEnglish
Pages (from-to)639-664
Number of pages26
JournalReview of World Economics
Volume150
Issue number4
DOIs
Publication statusPublished - 2014 Oct 18

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Keywords

  • Environmental regulations
  • Firm level
  • Outsourcing
  • Trade

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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