Multilateral trade and environmental reforms in a polluted open economy

Alberto Gallegos David
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Alberto Gallegos David: Universidad Anáhuac México Norte

Estudios Económicos, 2017, vol. 32, issue 2, 293-315

Abstract: This paper presents welfare-improving reforms for a polluted open economy aiming to reduce distortions from the use of trade and pollution taxes applied at a sub-optimal level. Using a general equilibrium model where two final goods are produced using an intermediate pollutant input and traded with a foreign country, the domestic economy chooses trade and environmental policies optimally. Terms of trade effects are key to finding that free trade and non-zero pollution taxes are the directions for multilateral welfare-improving reforms.

Keywords: optimal policies; international trade; multilateral externalities; environment; trade reforms (search for similar items in EconPapers)
JEL-codes: F18 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:emx:esteco:v:32:y:2017:i:2:p:293-315

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