Environmental Protection by One or Both Trading Partners in a Heckscher-Ohlin-Samuelson Model

Robert Kohn ()

Open Economies Review, 1998, vol. 9, issue 4, 327-342

Abstract: In this Heckscher-Ohlin-Samuelson model, production of a pollutive good damages production of another good within the same country. Unilateral and bilateral shifts from laissez faire to Pigouvian policy are numerically simulated for cases of low emissions and a high volume of trade, high emissions and a high volume of trade, and finally, high emissions and a low volume of trade. A country can be worse off when it becomes Pigouvian and it can be worse off when its trading partner becomes Pigouvian. Nevertheless, a simple game theory version of the model suggests a “race to the top”, in which all countries become Pigouvian. Copyright Kluwer Academic Publishers 1998

Keywords: environmental protection; international trade; Pigouvian tax; pollution damage (search for similar items in EconPapers)
Date: 1998
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DOI: 10.1023/A:1008313414694

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