Environmental regulation and eco-industry trade: Theory and evidence from the European Union
Carl Gaigne and
Lota Tamini
Working Papers from HAL
Abstract:
In this paper, we theoretically and empirically study the impact of environmental taxation on trade in environmental goods (EGs). Using a trade model in which the demand for and supply of EGs are endogenous, we show that the relationship between environmental taxation and demand for EGs follows a bell-shaped curve. Above a cutoff tax rate, a higher pollution tax rate can reduce the bilateral trade of EGs because there are too many low-productivity suppliers of EGs. Our empirical results confirm our main findings using data regarding the EU-27 countries. We also theoretically and empirically show that environmental taxation has a monotonically positive impact on the extensive margin of trade. Furthermore, we show that if countries apply an environmental tax rate equals to the "optimal" tax rate, 4.03% (e.g., the tax rate maximizing international trade of EGs), then trade in EGs would experience an increase of 22 percentage points.
Keywords: environmental taxation; taxation environnementale; international trade; environmental good; technologie propre; bien environnemental; commerce international (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-env and nep-int
Note: View the original document on HAL open archive server: https://hal.science/hal-01941269v1
References: Add references at CitEc
Citations:
Downloads: (external link)
https://hal.science/hal-01941269v1/document (application/pdf)
Related works:
Working Paper: Environmental regulation and eco-industry trade: Theory and evidence from the European Union (2018) ![Downloads](/downloads_econpapers.gif)
Working Paper: Environmental regulation and eco-industry trade: Theory and evidence from the European Union (2018) ![Downloads](/downloads_econpapers.gif)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-01941269
Access Statistics for this paper
More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD (hal@ccsd.cnrs.fr).