Question

19. A large polluting industry that is unlikely to move under the pollution haven hypothesis if a large carbon tax is imposed is ___________________________

Answer 1

Under pollution heaven hypothesis, a large firm often look for relocation of their factories and officies in different country in serch of cheap labor and raw material and capital. In this process they often end up using low environmental standard. These firms thus look for a country with rather less strict environmental norm to reduce costs. Thus a place with high carbon tax is a unlikely place for a firm to be relocated under pollution heaven hypothesis.

Therefore, the correct answer is: TRUE/ increasing the cost of reallocation