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Trade, Transboundary Pollution, and Foreign Lobbying

Charles Mason (), Victoria I. Umanskaya and Edward Barbier ()
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Victoria I. Umanskaya: Occidental College

Environmental & Resource Economics, 2018, vol. 70, issue 1, 223-248

Abstract: Abstract In this paper, we explore the use of trade policy in addressing transboundary stock pollution problems such as acid rain and water pollution. We show that a tariff determined by the current level of accumulated pollution can induce the time path of emissions optimal for the downstream (polluted) country. But if the upstream (polluting) country can lobby the downstream government to impose lower tariffs, distortions brought by corruption and foreign lobbying lead to a rise in the upstream country’s social welfare, and to a decrease in social welfare in the downstream country. Thus, the usefulness of trade policy as a tool for encouraging cooperation and internalizing transboundary externalities depends critically on the degree of governments’ susceptibility to foreign political influence.

Keywords: Transboundary pollution; Differential game; Lobbying (search for similar items in EconPapers)
JEL-codes: D72 F18 F59 Q56 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Trade, Transboundary, Pollution, and Foreign Lobbying (2012) Downloads
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