A NOTE ON TRADE LIBERALIZATION, PUBLIC ABATEMENT, AND WELFARE

Takumi Haibara

Review of Urban & Regional Development Studies, 2006, vol. 18, issue 3, 179-191

Abstract: This paper extends Haibara (2006) in order to focus on the welfare consequences of a pollution tax and foreign aid financed for public abatement. The main finding is that environmental protection as a result of increasing a pollution tax by the aid recipient increases the optimal value of foreign aid chosen by the donor and reduces that of a tariff chosen by the recipient. This implies that international environmental cooperation is possible between the donor and the recipient.

Date: 2006
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