So what? The results show that the environmental stringency index is insignificant in all regressions, leaving the author to conclude that environmental stringency has no measurable effect on net exports of polluting industries.
The economically correct rebuttal to this sort of thing is to point out that the other 49 states contain a lot of pizza lovers; the politically effective answer is to subject US-Mexican trade to a set of rules and arbitration procedures in which the Mexicans do too have a vote.
For example environmental stringency indices used in studies such as Tobey, ; van Beers and van den Bergh, ; Harris et al. But these two countries realize that they could produce more by focusing on those products with which they have a comparative advantage.
One might argue that the different applied variables are the causes of the mixed results reported in the literature.
However, for the majority of these studies the estimated coefficients are statistically and economically insignificant.
The basis for selection would be to ask what is achievable and relatively easy to monitor. Note that, in the example above, Country B could produce both wine and cotton more efficiently than Country A less time.
The authors ran three regressions: for total bilateral trade flows, for an aggregation of pollution-intensive-sectors, and for an aggregation of pollution-intensive-sectors that are non-resource based.
But setting the standard for success too high defeats confidence and confuses common sense. To make matters worse, however, there will almost always be numerous sets of individualized sets of charges that produce the desired environmental quality.
How extensive is the experience? Take it as a given that countries can do things that are perceived to be economically harmful to other countries - it does not necessarily matter whether this perception is correct.
Everyone, particularly the public, must believe that trading partners are honoring their commitments.