Competitiveness and environmental policies in a dynamic model

Abstract

This paper discusses the issue of competitiveness and environmental regulation in a dynamic framework. It presents an example and a general model. It is shown that the dynamic framework cannot lend general support to the hypothesis that strict environmental policies result in an increase in competitiveness. Instead, the paper shows that the dynamization of the model adds further ambiguity to the results of the static models as they were discussed in Stahler (1998).