Optimal Trade and Environmental Policies in a Polluted Small Open Economy

Alberto Gallegos
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Alberto Gallegos: Tecnológico de Monterrey, Campus Ciudad de México

Estudios Económicos, 2006, vol. 21, issue 2, 203-231

Abstract: Using a pollution-trade general equilibrium model I investigate the theoretical relationship between trade and environmental policies and their welfare effects in a perfectly competitive small open economy, facing trade and pollution distortions. Pollution does harm consumers but does not affect the productivity of neighboring firms and is generated as a by-product of the production process through the industrial use of a pure intermediate input. The final tradable good and the intermediate input are produced with a constant returns to scale technology where non-tradable primary factors of production are offered inelastically. In this framework there are three instruments considered: a tariff on a final good, a pollution tax and a tariff on the imports of the pollution-creating intermediate input.

Keywords: optimal policies; intermediate pollutant input; welfare; small open economy (search for similar items in EconPapers)
JEL-codes: F18 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:emx:esteco:v:21:y:2006:i:2:p:203-231

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