Regional integration and the environment

Arvind Panagariya and Sethaput Suthiwart-Narueput

Environment and Development Economics, 1997, vol. 2, issue 1, 5-18

Abstract: This paper explores the interaction between regional integration and the environment in a formal three-country, three-good model which incorporates pollution. Our main findings are: (1) whether preferential trading improves welfare depends critically on the level of domestic pollution charge extant and the direction of trade; (2) the introduction of preferential trading may lower welfare even when the pollution policy is chosen optimally; and (3) coordination of environmental policies only makes sense when pollution is transnational.

Date: 1997
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