The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test

The premise that trade suffers from the imposition of environmental policy has a strong element of a priori plausibility, but, surprisingly, has little empirical support. The present paper provides an empirical test of the hypothesis that stringent environmental policy has caused trade patterns to deviate in commodities produced by the world's "dirty" industries. The empirical tests are conducted using the cross-section Hechscher-Ohlin-Vanek model of international trade. It is not that the introduction of stringent environmental control measures has caused trade patterns to deviate from the Hechscher-Ohlin-Vanek predictions. Copyright 1990 by WWZ and Helbing & Lichtenhahn Verlag AG