Openness to trade speeds diffusion of at least some environmental technologies

Mary Lovely and David Popp find that openness to trade helps speed the adoption of pollution reducing technology in developing countries (at least for SO₂ controls in coal-fired power plants): Trade, Technology, and the Environment: Why Have Poor Countries Regulated Sooner? .

The authors look at the impact of available technology on the decision of countries (that are not themselves pollution control innovators) to adopt environmental SO₂ and NO_X regulations for coal-fired power plants. 

Here's the abstract:

Countries who adopted regulation of coal-fired power plants after 1980 generally did so at a much lower level of per-capita income than did early adopters – poor countries regulated sooner. This phenomenon suggests that pioneering adopters of environmental regulation provide an advantage to countries adopting these regulations later, presumably through advances in technology made by these first adopters.

Focusing specifically on regulation of coal-fired power plants, we ask to what extent the availability of new technology influences the adoption of new environmental regulation. We build a general equilibrium model of an open economy to identify the political-economy determinants of the decision to regulate emissions. Using a newly-created data set of SO2 and NOX regulations for coal-fired power plants and a patent-based measure of the technology frontier, we test the model’s predictions using a hazard regression of the diffusion of environmental regulation across countries.

Our findings support the hypothesis that international economic integration eases access to environmentally friendly technologies and leads to earlier adoption, ceteris paribus, of regulation in developing countries. By limiting firms’ ability to burden shift, however, openness may raise opposition to regulation. Our results suggest that domestic trade protection allows costs to be shifted to domestic consumers while large countries can shift costs to foreign consumers, raising the likelihood of adoption. Other political economy factors, such as the quality of domestic coal and election years, are also important determinants.

There are two competing effects here.  On the one hand, openness speeds the adoption of environmental regulation as developing countries take advantage of the existing technology:

...we provide new evidence... showing that increased access to technology via trade increases the likelihood that a country will adopt environmental regulation. While we do find that richer countries adopt regulation first, developing countries adopt environmental regulation at earlier stages of development than did developed countries, as they can take advantage of off the-shelf technologies to carry out emission reductions.

On the other hand, the willingness by firms to acquiesce in regulation depends on the ability to pass on costs.  This is harder in an open economy, tending to retard adoption:

We acknowledge the double-edged nature of openness, however, in that the global
market constrains domestic firms’ ability to pass along higher abatement costs. To the extent
that local firms are protected from such competition through trade restrictions, their ability to
shift the regulatory burden to domestic consumers may be larger and their opposition to
regulation lessened. We also consider the size of the domestic economy relative to the world
market, reflecting the ability of local producers to pass costs through to foreign consumers....

Which effect dominates?  Lovely and Popp find that the "access" effect tends to dominate the "cost pass along" effect for SO₂ under current conditions.  However,

Because the costs of boiler modifications necessary to meet weaker NO_X regulations are lower than the costs of SO₂ controls, technological advances and the ability to pass along cost increases appear less important here than for sulfur dioxide.

Also,

Our results provide new evidence on the role of economic openness in allowing these
spillovers to spread across country borders. We posit that openness both eases access to
technology and limits domestic firms’ ability to pass regulatory costs to consumers. Our
findings support the view that small, open economies are least able to transfer these costs away
from firms and, thus, are less likely to regulate, ceteris paribus. They suggest that international
burden shifting is an important factor in the political economy of environmental regulation.

The last sentence in the abstract is kind of vague, here's a bit more:

In addition to the links between trade and technology, we find that other political
economy forces are important. Factors affecting the value placed on abatement, such as
population density and income level, increase the likelihood of regulation. Moreover, regulations
that negatively affect the coal sector are less likely in countries with large coal reserves, but more likely the larger are reserves of dirty coal. Finally, the politics of globalization appear important, as Eastern European countries have passed more stringent regulations than other countries at similar levels of development in their progress toward joining the EU.