Plant Location, Wind Direction and Pollution Policy Under Offshoring

We examine pollution policy in a unified three‐country framework, with the country in the middle playing double roles as both a polluter and a victim. We find that government preference over profits and consumer surplus to be important and so is environmentalism. In particular, the most downwind cou...

Full description

Saved in:
Bibliographic Details
Published in:World economy 2015-01, Vol.38 (1), p.151-171
Main Authors: Zhao, Laixun, Haruyama, Tetsugen
Format: Article
Language:English
Subjects:
Consumer surplus
Consumers
Economic incentives
Environmental policy
Environmentalism
Incentives
Industrial plants
Interaction
Location
Location of industry
Oligopolies
Oligopoly
Outsourcing
Pollution
Pollution Control
Preferences
Profits
Studies
Trade-off
Victims
Citations: Items that this one cites
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We examine pollution policy in a unified three‐country framework, with the country in the middle playing double roles as both a polluter and a victim. We find that government preference over profits and consumer surplus to be important and so is environmentalism. In particular, the most downwind country has the least incentives to control pollution. Under oligopoly, several additional undesirable scenarios may arise, due to the interaction between wind direction and the incentive trade‐offs in rent‐shifting and pollution control. We analyse the mechanisms behind and provide policy guidance.
ISSN:0378-5920
1467-9701
DOI:10.1111/twec.12257