Welfare and Trade Effects of International Environmental Agreements

Catia Montagna, Avanti Nisha Pinto and Nikolaos Vlassis ()
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Avanti Nisha Pinto: University of Brighton
Nikolaos Vlassis: University of Aberdeen

Environmental & Resource Economics, 2020, vol. 76, issue 2, No 6, 345 pages

Abstract: Abstract We analyse the welfare effects of environmental policy arising from the formation of an international environmental agreement on the participating and non-participating countries and thus shed light on the potential incentives for a country to join such an agreement. Within a N-country Q-goods general equilibrium framework under free-trade conditions, we consider unilateral and cooperative policy settings and, within the latter, country-specific and fully harmonized policies within the agreement. A key result of the paper is the emergence of a negative relationship, arising from terms of trade effects, between the welfare changes of the participating and non-participating countries following the formation of the agreement. These however do not result in a zero sum welfare outcome for the world as a whole.

Keywords: International environmental agreements; Environmental taxation; International trade; Pareto efficiency; Pareto improving reforms; Climate change (search for similar items in EconPapers)
JEL-codes: F18 H23 Q56 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s10640-020-00428-x

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