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Shadow prices, environmental stringency, and international competitiveness

Author

Listed:
  • Tim Jeppesen
  • John List
  • Daan van Soest
Abstract
Empirical tests of the relationship between international competitiveness and the severity of environmental regulations are hampered by the lack of pollution abatement cost data for non-U.S. countries. The theory of the firm suggests that environmental stringency can be measured by the difference between a polluting input's shadow price and its market price. We make a first attempt at quantifying such a measure for two industries located in nine European OECD countries. Overall, we provide (i) a new approach to measure cross-country regulatory differences in that we use a theoretically attractive measure of industry-specific private compliance cost, and (ii) empirical estimates that are an attractive tool for researchers and policymakers who are interested in examining how economic activity is influenced by compliance costs.

Suggested Citation

  • Tim Jeppesen & John List & Daan van Soest, 2006. "Shadow prices, environmental stringency, and international competitiveness," Natural Field Experiments 00484, The Field Experiments Website.
    • Handle: RePEc:feb:natura:00484
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    References listed on IDEAS

    as
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