Trade, cluster and environmental product standard

Jinhao Liu, Toshiyuki Fujita

Research output: Contribution to journalArticlepeer-review


This study investigates the impact of environmental product standards on environment and firm locations in an NEG (New Economic Geography) framework. Introducing unilateral environmental product standards and consumption externalities into a footloose capital model, we find that their effect depends on the degree of compliance of the standards and trade cost. Environmental product standards could reduce firm share and emissions in a regulated region when most firms comply with them. When the standards are not widely complied with, their effect depends on trade cost. It is possible that the unilateral standards raise the number of firms in a regulated region and worsen the environment in that region when trade cost is sufficiently small. These results could be useful for evaluating the implementation of environmental product standards as an environmental policy.

Original languageEnglish
Pages (from-to)655-679
Number of pages25
JournalEnvironmental Economics and Policy Studies
Issue number3
Publication statusPublished - Jul 1 2018

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law


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