The Environmental Bias of Trade Policy

Joseph Shapiro

No 26845, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper describes a new fact, then analyzes its causes and consequences: in most countries, import tariffs and non-tariff barriers are substantially lower on dirty than on clean industries, where an industry's “dirtiness” is defined as its carbon dioxide (CO2) emissions per dollar of output. This difference in trade policy creates a global implicit subsidy to CO2 emissions in internationally traded goods and so contributes to climate change. This global implicit subsidy to CO2 emissions totals several hundred billion dollars annually. The greater protection of downstream industries, which are relatively clean, substantially accounts for this pattern. The downstream pattern can be explained by theories where industries lobby for low tariffs on their inputs but final consumers are poorly organized. A quantitative general equilibrium model suggests that if countries applied similar trade policies to clean and dirty goods, global CO2 emissions would decrease and global real income would change little.

JEL-codes: F13 F18 F6 H23 Q50 Q56 (search for similar items in EconPapers)
Date: 2020-05
New Economics Papers: this item is included in nep-ene, nep-env, nep-int and nep-res
Note: EEE IFM ITI PE POL
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Published as Joseph S Shapiro, 2021. "The Environmental Bias of Trade Policy," The Quarterly Journal of Economics, Oxford University Press, vol. 136(2), pages 831-886.

Downloads: (external link)
http://www.nber.org/papers/w26845.pdf (application/pdf)

Related works:
Journal Article: The Environmental Bias of Trade Policy* (2021)
Working Paper: The Environmental Bias of Trade Policy (2020)
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:nbr:nberwo:26845

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w26845

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().