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Environmental Product Standards in
North-South Trade
Abstract
One channel through which environment is damaged is consumption. To protect environment, various product standards are introduced all over the world. By using a new economic geography framework, this paperexplores the effects of environmental product standards on environment in a North-South trade model. We examine a situation in which North unilaterally introduces an environmental product standard. Specifically, those products that do not meet the standard are not allowed to be sold in the North market. We find that such a standard may worsen North environment but improve South environment through firm relocation.
