Kitzmuller, Markus2013-01-042013-01-042012-10https://hdl.handle.net/10986/12092This paper develops a simple model to analyze the interaction between strategic corporate public good provision, international firm location and national regulation. An information-based strategic corporate public good provision mechanism is proposed to shed light on recent firm behavior within different regulatory environments. The main insight derived is that in the presence of firms with geographic flexibility (multinational enterprises) and market provision of an international public credence good, unilateral (non-cooperative) regulatory scope depends on (1) the absolute probabilities to verify firms' corporate public good provision levels within different geographic and institutional environments, and (2) the differential between these probabilities across countries. The relative information asymmetry determines not only the market levels of the public good produced under autarky, but also the relocation incentives of multinational enterprises. A firm trades off lower production costs, which increase its competitiveness in pricing, with higher expected informational price premiums, which decrease its competitiveness. A government's ability to regulate above market (corporate public good provision) levels decreases with the absolute level of foreign transparency, while it increases in the relative (positive) difference between the same transparency at home and abroad. This may not only explain mixed empirical evidence of theoretic propositions such as the Pollution Haven Hypothesis and Regulatory Race to the Bottom dynamics, but also open up interesting policy implications as the international information playing field becomes leveled through development, while existing regulations are rather rigid, and policy coordination remains limited.CC BY 3.0 IGOACCESS TO INFORMATIONACCOUNTINGADVERSE EFFECTSADVERTISINGARBITRAGEBANK POLICYBARGAININGBARGAINING POWERBERTRAND COMPETITIONBINDING CONSTRAINTBONDBRANDCHILD LABORCLEAN TECHNOLOGYCOMMERCECOMMITMENT DEVICECOMPARATIVE ADVANTAGECOMPETITIVE ADVANTAGESCOMPETITIVE PRICESCOMPETITIVENESSCONSUMER EXPECTATIONSCONSUMER PREFERENCESCONSUMERSCONTRACTUAL OBLIGATIONCOORDINATION FAILURECORPORATE TAXESCREDIBILITYDERIVATIVEDEVELOPED COUNTRIESDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPMENT POLICYDISCLOSURE OF INFORMATIONDISPLACEMENTDRIVERSDUMPINGECOLOGICAL ECONOMICSECONOMIC ACTIVITYECONOMIC ANALYSISECONOMIC BEHAVIORECONOMIC COMPETITIONECONOMIC INTEGRATIONECONOMIC MOTIVATIONECONOMIC PERFORMANCEECONOMIC THEORYECONOMICSECONOMISTSEMERGING MARKETEMERGING MARKET ECONOMIESEMERGING MARKET ECONOMYEMERGING MARKETSEMISSIONSEMPIRICAL ANALYSISEMPIRICAL EVIDENCEEMPLOYMENTENVIRONMENTALENVIRONMENTAL ECONOMICSENVIRONMENTAL IMPACTSENVIRONMENTAL KUZNETSENVIRONMENTAL MANAGEMENTENVIRONMENTAL PERFORMANCEENVIRONMENTAL POLICYENVIRONMENTAL PROTECTIONENVIRONMENTAL QUALITYENVIRONMENTAL REGULATIONSENVIRONMENTSEQUILIBRIUMEQUILIBRIUM PRICESEXPENDITURESEXPLOITATIONEXPORTSEXTERNALITIESEXTERNALITYFAIRFAIR TRADEFINANCIAL MARKETSFIRM PERFORMANCEFIXED COSTSFLOW OF INFORMATIONFOREIGN DIRECT INVESTMENTFREE TRADEGDPGLOBALIZATIONHOLDINGHORIZONTAL INTEGRATIONIMPERFECT INFORMATIONINCENTIVE COMPATIBILITY CONSTRAINTINCOME EFFECTSINCOME LEVELSINDUSTRIALIZATIONINFORMATION ASYMMETRIESINFORMATION ASYMMETRYINFORMATION DISCLOSUREINNOVATIONINSTRUMENTINTERNATIONAL BANKINTERNATIONAL CAPITALINTERNATIONAL STANDARDSINTERNATIONAL TRADELABOR FORCELABOR ORGANIZATIONLABOR STANDARDLABOR STANDARDSLEGAL TOOLSLIABILITYLOCAL MARKETSLYONMARGINAL COSTMARGINAL COSTSMARKET ECONOMIESMARKET ECONOMYMARKET FAILUREMARKET FORCESMARKET LEVELMARKET LEVELSMARKET MECHANISMMARKET MECHANISMSMARKET SHAREMARKET VALUEMARKETINGMINESMONITORING COSTSMONITORING TECHNOLOGYMONOPOLYNASH EQUILIBRIUMNEGATIVE EXTERNALITYPER CAPITA INCOMEPERFECT INFORMATIONPOLITICAL ECONOMYPOLLUTIONPOLLUTION ABATEMENTPOLLUTION LEVELSPRICE SETTINGPRICING STRATEGYPRIVATE INFORMATIONPRODUCERSPRODUCT MARKETSPRODUCT QUALITYPRODUCTION COSTSPRODUCTION PROCESSPRODUCTION PROCESSESPRODUCTIVITYPROFIT MAXIMIZATIONPROPERTY RIGHTSPUBLIC GOODPUBLIC GOODSPURCHASINGPURCHASING POWERQUALITY STANDARDSREGULATORY AUTHORITYREGULATORY CONSTRAINTREGULATORY FRAMEWORKREGULATORY STANDARDSREGULATORY SYSTEMRELEVANT MARKETSRETAILINGRETURNSSALESSCALE EFFECTSSELF-REGULATIONSPREADSTOCK MARKETSTOCKSSUBSTITUTESUPPLIERSSUPPLY CHAINSTAXTAX REVENUETRADE BARRIERSTRADE LIBERALIZATIONTRADE POLICYTRADE REFORMSTRADINGTRANSPARENCYUTILITY FUNCTIONSUTILITY MAXIMIZATIONVALUATIONWEALTHWELFARE EFFECTSWELFARE FUNCTIONWILLINGNESS TO PAYWorld Bank10.1596/1813-9450-6251