ENVIRONMENTAL POLICY AND TRADE LIBERALIZATION: THE CASE OF TRANSBOUNDARY POLLUTION FROM CONSUMPTION

Kenji Fujiwara ()

No 61, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: This paper develops a reciprocal market model of international duopoly with transboundary pollution from consumption to examine the effects of bilateral tariff reductions on the equilibrium pollution tax and welfare. We show that tariff reductions induce each country to raise an emission tax and that trade liberalization is welfare-improving if the parameter of pollution damages is suciently large. These results are in contrast to the case of production-generated pollution and we seek the reason for this contrast.

Keywords: consumption-generated pollution; tariff reduction; emission tax; international duopoly. (search for similar items in EconPapers)
Pages: 23 pages
Date: 2010-11, Revised 2010-11
New Economics Papers: this item is included in nep-env and nep-mic
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:61

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