Cross-Border Externalities and Trade Liberalization: The Strategic Control of Pollution

Rodney Ludema and Ian Wooton ()

Canadian Journal of Economics, 1994, vol. 27, issue 4, 950-66

Abstract: The authors examine international trade in a commodity whose production creates a negative externality for the importing country and they consider the nations' strategic policy choices when they can restrict trade and when they are bound by a free-trade agreement. When pollution-abatement technology is available, the exporting country induces its adoption, despite national indifference to the externality, in order to reduce the tariff. In a free-trade agreement, environmental policy is used to exploit monopoly power in trade. An alternative policy instrument, a process standard, is introduced. National competition in controlling emissions leads to very restrictive antipollution measures. We examine international trade in a commodity whose production creates a negative externality for the importing country; and we consider the nations' strategic policy choices, when they can restrict trade, and when they are bound by a free-trade agreement. When pollution-abatement technology is available, the exporting country induces its adoption, despite national indifference to the externality, in order to reduce the tariff. In a free-trade agreement, environmental policy is used to exploit monopoly power in trade. An alternative policy instrument, a process standard is introduced. National competition in controlling emissions leads to very restrictive anti-pollution measures.

Date: 1994
References: Add references at CitEc
Citations: View citations in EconPapers (55)

Downloads: (external link)
http://links.jstor.org/sici?sici=0008-4085%2819941 ... EATLT%3E2.0.CO%3B2-I (text/html)
only available to JSTOR subscribers

Related works:
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:cje:issued:v:27:y:1994:i:4:p:950-66

Ordering information: This journal article can be ordered from
https://www.economic ... ionen/membership.php

Access Statistics for this article

Canadian Journal of Economics is currently edited by Zhiqi Chen

More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Werrner Antweiler, Treasurer UBC Sauder School of Business 2053 Main Mall Vancouver, BC, V6T 1Z2. Contact information at EDIRC.
Bibliographic data for series maintained by Prof. Werner Antweiler ().