The Political Economy of Tariffs and Environmental Standards

Yu-Bong Lai

Journal of Institutional and Theoretical Economics (JITE), 2005, vol. 161, issue 3, 473-490

Abstract: This paper highlights the effects of the structures of games on interest groups' lobbying behavior. When policies are determined simultaneously, environmentalists prefer a higher tariff and a stricter environmental product standard, in order to hinder imports of a good that generate negative consumption-type externalities. In a sequential game, where the tariff is determined first, environmentalists will attempt to reduce the tariff. A reduction in the tariff tightens the environmental standard, which has a stronger trade-restrictive effect. To take advantage of the stronger trade-restrictive effect of environmental regulation, environmentalists will strategically lobby for a lower tariff barrier.

JEL-codes: F13 F18 Q56 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (4)

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