THE PORTER HYPOTHESIS AT 20:

THE EFFECT OF ENVIRONMENTAL REGULATION

ON PRODUCTIVITY AND COMPETITIVENESS

Miguel Quiroga

Economics Department, Universidad de Concepcion

Porte

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RESEARCH BACKGROUND

Joint with Thomas Sterner and Martin Persson

It is based in the Heckscher-Ohlin-Vanek model of trade.

Country’s net exports are expressed as a linear function of environmental endowments.

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ISSUES

• We have been testing an incorrect HOV equation. The correct factor content of trade definition includes a consumption condition that could be correlated with the environmental endowment (Trefler and Zhu, 2006).

• Parameters estimated using OLS would be downwards biased, increasing the possibility to find no evidence of pollution haven or the opposite result.

• Industrial aggregation matters

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