Optimal Volume of Environmentally Damaging Trade

Robert E. Kohn and Peter D. Capen

Scottish Journal of Political Economy, 2002, vol. 49, issue 1, 22-38

Abstract: It is controversial whether international trade enhances or degrades the global environment. In this model, environmental quality, as measured by biodiversity, is damaged by the consequences of trade, which include the commercialization of natural habitat, pollution and bioinvasion. However, there are also benefits of trade. When both countries internalize the external costs of production and trade, measures of environmental quality may be higher or lower as a consequence of trade, but there is always, unambiguously, less trade the more environmentally damaging it is.

Date: 2002
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