Strategic Environmental Policies and the Gains from Trade Liberalization

Kenji Fujiwara (kenjifujiwara@kwansei.ac.jp)

Review of Development Economics, 2010, vol. 14, issue 2, 360-373

Abstract: The literature on strategic environmental policy has not fully addressed welfare effects of trade liberalization from autarky. In a reciprocal market model of duopoly with transboundary pollution, we study how reductions in transport costs and import tariffs affect the Nash‐equilibrium welfare of an environmental policy game as compared to any initial state including autarky. We show three patterns of gainfulness of trade depending on the interaction between marginal damage from pollution and the degree of transboundary pollution.

Date: 2010
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https://doi.org/10.1111/j.1467-9361.2010.00558.x

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Working Paper: Strategic Environmental Policies and the Gains from Trade Liberalization (2010)
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