Pollution haven effect in North-South trade: a theoretical analysis under the mixed duopoly Cournot model

Utilizing the framework of the mixed duopoly Cournot model in North-South trade, this paper provides evidence that Pollution Haven Effect exists under optimal environmental regulations and discusses how it is affected by the production costs and environmental abatement costs in the developed and developing countries. We also find that under optimal environmental regulations, the heterogeneous impacts on the Pollution Haven Effect make developed countries motivated to reduce the environmental abatement costs and make developing countries more incentive to reduce the production costs.