TY - JOUR AU - Broner,Fernando AU - Bustos,Paula AU - Carvalho,Vasco M. TI - Sources of Comparative Advantage in Polluting Industries JF - National Bureau of Economic Research Working Paper Series VL - No. 18337 PY - 2012 Y2 - August 2012 UR - http://www.nber.org/papers/w18337 L1 - http://www.nber.org/papers/w18337.pdf N1 - Author contact info: Fernando Broner CREI and Universitat Pompeu Fabra Ramon Trias Fargas, 25-27 08005 Barcelona Spain Tel: +34-935422601 Fax: +34-935421860 E-Mail: fbroner@crei.cat Paula Bustos CREI and Universitat Pompeu Fabra Ramon Trias Fargas, 25-27 08005 Barcelona Spain E-Mail: pbustos@crei.cat Vasco M. Carvalho CREI Ramon Trias Fargas, 25-27 08005 Barcelona, SPAIN Tel: (+34) 93 542 27 60 Fax: (+34) 93 542 18 60 E-Mail: vcarvalho@crei.cat M3 - presented at "SI 2012 Environmental & Energy Economics", July 23-24, 2012 AB - We study the determinants of comparative advantage in polluting industries. We combine data on environmental policy at the country level with data on pollution intensity at the industry level to show that countries with laxer environmental regulation have a comparative advantage in polluting industries. Further, we address the potential problem of reverse causality. We propose an instrument for environmental regulation based on meteorological determinants of pollution dispersion identiĀ…ed by the atmospheric pollution literature. We find that the effect of environmental regulation on the pattern of trade is causal and comparable in magnitude to the effect of physical and human capital. ER -