Essays on trade, environment, and regulation

Thakur, Prakrati

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https://hdl.handle.net/2142/115537 Copy

Description

Title

Essays on trade, environment, and regulation

Author(s)

Thakur, Prakrati

Issue Date

2022-04-12

Director of Research (if dissertation) or Advisor (if thesis)

Deltas, George

Doctoral Committee Chair(s)

Deltas, George

Committee Member(s)

• Bernhardt, Dan
• Deryugina, Tatyana
• Howard, Greg

Department of Study

Economics

Discipline

Economics

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

Trade, Environment, Regulation, Waste, Externality, Diffusion

Abstract

International trade in waste, a growing component of international trade, poses negative externalities on the health of the workers employed in the recycling sector and the environment in the importing countries. However, despite the market failures, international trade in waste remains a largely understudied issue in the economics literature. I study the determinants and the welfare consequences of international trade in waste in the first two chapters of this dissertation. To study the effects of international trade in waste, I study the effects of a set of waste trade regulations on economic benefits, environmental costs, and manufacturing production. In contrast to these works, which focus on the impact of regulation on economic outcomes, in the final chapter, I investigate how the structure of international trade creates economic incentives for countries to adopt health and environmental regulations. In Chapter 1, I study the determinants of international trade in waste by employing data on international waste flows and a reduced-form structural gravity model. My estimates reveal that waste flows are positively associated with exporters' and importers' income levels and negatively associated with trade barriers, i.e., they follow the gravity predictions. Additionally, low-value waste is more sensitive to trade barriers than high-value waste, while richer countries import a greater share of high-value waste than low-value waste. Although the reduced-form analysis in this chapter yields key empirical facts in waste trade data, it does not allow me to draw welfare conclusions. In Chapter 2, I quantify the welfare effects of international trade in waste. Based on the empirical findings in the preceding chapter, I build a structural gravity model in which the generation of waste, including recyclables, is expressed as a byproduct of manufacturing. I find that existing patterns of waste trade make countries of all income levels better off. However, trade in low-value waste, which creates large negative externalities relative to its private value, makes middle-income countries worse off. I estimate that China’s 2018 ban on low-value waste imports made China and several lower-income countries better off. Depending on the type of waste trade banned, manufacturing production in countries is also differentially affected. While a high-value waste trade ban reduces manufacturing output for rich countries, a low-value waste trade ban reduces the output for lower-income countries. In Chapter 3, jointly written with Sergio Rocha, I study network effects in the diffusion of regulatory standards through international trade. Our results show that countries are more likely to domestically adopt regulations that they comply with while exporting. We find evidence of such diffusion primarily in regulations concerning attributes of the final product rather than production processes. Consistent with a network effect, we show that countries more open to international trade are the drivers of regulatory diffusion. In an analysis of diffusion in individual features within labelling regulations---the most prevalent regulations in our data---we find that labelling requirements ensuring the safety of use propagate the most, and countries tend to domestically adopt features similar to those imposed by their importing partners. Overall, our results support the argument that economic integration can facilitate the strengthening of regulatory standards.

Graduation Semester

2022-05

Type of Resource

Thesis

Copyright and License Information

Copyright 2022 Prakrati Thakur

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