A Dynamic Model of Effects of Effects of Trade and Environmental Policies on Firms' Offshoring and Clean Technology Adoption Decisions

This paper develops a dynamic general equilibrium model to analyze the effects of changes in trade and environmental policies on firms' production location choices and clean technology adoptions to reduce emission. During this process, the equilibrium worker's wages and environmental quality of related countries are determined. In addition, this model is applied to the trade and production relocation issues between the United States and China over 1999-2013 to quantify the pollution haven effects and the total production offshoring directly and indirectly from the U.S. to China. Further, the long-run predictions on offshoring and emission levels in both countries and counterfactual policy analysis are discussed in this paper.

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Conference Paper/ Presentation
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JEL Codes:
F18; F23; D21; J31; Q52; Q56

 Record created 2017-04-01, last modified 2018-01-23

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