EU air pollution regulation: A breath of fresh air for Eastern European polluting industries?

Does air quality regulation in the European Union (EU) foster polluting activity in emerging and developing countries? In this paper, we propose an original variable that evaluates regulation stringency, based on the EU Air Quality Framework Directive. Focusing on the underlying mechanism and controlling for endogeneity in the relation between regulation and trade, we provide robust evidence that EU countries implementing more stringent air pollution regulations import relatively more in pollution-intensive sectors from developing and emerging countries in Europe and Central Asia. (C) 2017 Elsevier Inc. All rights reserved.