When formal regulation is weak or absent, communities often use other channels to induce pollution abatement by local factories in a process of "informal regulation." The resulting "pollution equilibrium" reflects the relative bargaining power of the community and the plant. This note uses Indonesian data from 1989-90 on plant-level organic water pollution to test the informal regulation hypothesis.

This paper exploits a newly developed data set to investigate recent changes in the international distribution of industrial pollution. In particular, the authors examine three issues: (1) the relationship between the toxic intensity of industrial production and the level of economic development, (2) the impact of OECD environmental regulation on global changes in toxic intensity, and (3) the relationship between trade policy and the toxic intensity of industrial production in LDC's. 10 refs.

When formal regulation is weak or absent, communities often use other channels to induce pollution abatement by local factories in a process of 'informal regulation.' The resulting 'pollution equilibrium' reflects the relative bargaining power of the community and the plant. This note uses Indonesian data from 1989-90 on plant-level organic water pollution to test the informal regulation hypothesis. Copyright 1996 by University of Chicago Press.