Strategic Environmental Policy, International Trade and Self-enforcing Agreements: The Role of Consumers' Taste for Variety

Michael Finus () and Alaa Al Khourdajie

Strategic Behavior and the Environment, 2018, vol. 7, issue 3-4, 317-350

Abstract: We study the coordination of environmental policy within an agreement in the context of international trade. In an n-country intra-industry trade model, firms produce a horizontally differentiated good and consumers have a taste for variety. Governments choose strategically an emission tax and their membership in an international agreement. We show that only a strong taste for variety reduces the competition among governments sufficiently enough to allow for some form of policy coordination, though full cooperation will never be obtained.

Keywords: Strategic environmental policy; International trade; Self-enforcing international agreements; Horizontal product differentiation; Taste for variety (search for similar items in EconPapers)
JEL-codes: C72 F18 Q58 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Strategic Environmental Policy, International Trade and Self-enforcing Agreements: The Role of Consumers' Taste for Variety (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:now:jnlsbe:102.00000086

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