Environmental Regulation and International Trade

Eftichios Sartzetakis () and Christos Constantatos

Journal of Regulatory Economics, 1995, vol. 8, issue 1, 72 pages

Abstract: In this paper, we investigate how a country's choice of environmental policy instrument affects the international competitiveness of its firms. We show that in a Cournot-Nash equilibrium, the total market share of firms regulated through tradeable emission permits increases relative to that of the firms operating under command and control due to better allocation of total abatement among the firms in the country. Our work suggests that free trade situations should not only result in similar environmental standards but also in similar regulatory regimes. It may come as no surprise that the environmental authorities in Canada are seriously considering following the United States in instituting a tradeable emission permits mechanism. Copyright 1995 by Kluwer Academic Publishers

Date: 1995
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