DOES ENVIRONMENTAL DUMPING LEAD TO DELOCATION

Environmental dumping is often viewed as an instrument used by some co untries in the attempt to attract foreign investments. Stated otherwis e, the delocation of firms would be a major outcome of a stiff environ mental policy. In this paper, we study the impact of a strict anti-pol lution policy pursued by a government on domestic firms' locational de cisions, and determine the main variables that interact with such a po licy. Some preliminary welfare implications are also provided.