Question

1 Empirical estimates of the damages associated with climate change have become increasingly pessimistic over time.

True

False

2 The pollution haven hypothesis (PHH) predicts that, all else being equal between two countries, profit-maximizing firms will choose to set up in the country with less strict (i.e. less costly) environmental regulations. What reasons do we have to doubt this hypothesis?

1 Dirty industries are often capital-intensive, while developing nations are often capital-poor.

2 Transport cost for some dirty goods (e.g. cement) are considerable.

3 Most multinational corporations tend to favor the regulatory standards of their home country, no matter where they operate.

4 All of the above.

Answer 1