Trade liberalization, consumption shifting and pollution: Evidence from Mexico's used vehicle imports

This paper develops a model of used vehicle trade between the United States and Mexico, countries with different environmental regulations regarding vehicle emissions. We demonstrate that the United States, with its strict environmental regulations, has a motive to export used vehicles to Mexico, wh...

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Bibliographic Details
Published in:Review of international economics 2019-11, Vol.27 (5), p.1591-1608
Main Authors: Chen, Liang, Garcia‐Medina, B. Cecilia, Wan, Rui
Format: Article
Language:English
Subjects:
Air pollution
Consumption
Economic models
Emissions
Environmental regulations
Imports
Regulation
Trade liberalization
Vehicles
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Summary:This paper develops a model of used vehicle trade between the United States and Mexico, countries with different environmental regulations regarding vehicle emissions. We demonstrate that the United States, with its strict environmental regulations, has a motive to export used vehicles to Mexico, which impacts air pollution emissions from vehicle driving in Mexico. Using unique data on the import and registration of vehicles in Mexico after NAFTA, we find that Mexico's used vehicle imports reduce pollution emissions generated from vehicle driving mainly because of the technique effect, that is, model–age‐comparable vehicles imported from the United States emit less than those originally operated in Mexico.
ISSN:0965-7576
1467-9396
DOI:10.1111/roie.12436