Trade, technical progress and the environment: the role of a unilateral green tax on consumption

Daniela Marconi

No 744, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: The paper proposes a two-country general equilibrium model of endogenous growth and trade between two regions, North and South, with different environmental standards. Pollution is a by-product of consumption and in order to abate it the northern region unilaterally imposes a green tax on consumption. As the tax affects domestic demand of consumer goods according to their pollution intensities, regardless of where those goods are produced, the model shows that such a unilateral environmental policy can increase the speed of technological change and pollution abatement in both regions.

Keywords: Trade; environment; consumption externality; technological change (search for similar items in EconPapers)
JEL-codes: F14 F18 I32 O30 (search for similar items in EconPapers)
Date: 2010-02
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_744_10

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