Developing country second-mover advantage in competition over environmental standards and taxes

Arbeitspapier

We show that, in competition between a developed country and a developing country over environmental standards and taxes, the developing country may have a second-mover advantage. In our model, firms do not unanimously prefer lower environmental-standard levels. We introduce this feature to an otherwise familiar model of fiscal competition. Four distinct outcomes can be characterized by varying the marginal cost to firms of an environmental externality: (1) the outcome may be efficient; (2) the developing country may be a pollution haven - a place to escape excessively high environmental standards in the developed country; (3) the developing country may undercut the developed country and attract all firms; (4) the developed country may be a pollution haven.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 3686

Classification and Topics

• Classification: Wirtschaft ; Structure and Scope of Government: General ; Business Taxes and Subsidies including sales and value-added (VAT) ; State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects ; International Fiscal Issues; International Public Goods
• Subject: environmental standards ; fiscal competition ; second-mover advantage ; tax competition ; Umweltauflage ; Ökosteuer ; Steuerwettbewerb ; Institutioneller Wettbewerb ; Entwicklungsländer ; Industriestaaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Groenert, Valeska ; Zissimos, Benjamin
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/54922
• Last update: 10.03.2025, 11:44 AM CET