Environmental Policy, Policy Uncertainty and Relocation Decisions

Topics:
Human Capital,
Relocation
Tags:
Difference,
Policy Stringency,
Relocation Decision
Source:
Ghent University

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Overview: This paper analyse the relocation decision of a monopolist under various assumptions with respect to the difference in environmental policy stringency between the home and foreign country. One shows that relocation because of such a difference is highly unlikely in a model that includes uncertainty with respect to the difference in policy stringency. Relocation is however possible if the difference in other production costs is significant. One also shows the potential for hysteresis-effects: once relocated, the firm will require a reduction in the difference of environmental policy stringency that is larger than the increase that leads to the relocation decision.

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Format: PDF | Size: 311KB | Date: Jan 2002 | Pages: 41

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