Environmental Regulations, International Trade and Strategic Behavior

Suleyman Karaman and Savas Alpay

No 547, Econometric Society 2004 Far Eastern Meetings from Econometric Society

Abstract: In this paper, the issue of strategic behavior in the presence of environmental regulations and international trade is investigated. In a two-country, one-good, two-producer model as in Ulph (1996), we analyze the Nash equilibrium of the game where governments may behave strategically in choosing their environmental policies, and producers may behave strategically in choosing their R&D investments. In the simultaneous-move game, there is a unique equilibrium and both governments and producers act strategically. In the sequential-move game, two equilibrium sets of actions are present; however, one of them welfare-dominates the other: first moving government acts strategically, the follower government will not act strategically, and none of the producers will behave strategically. Some of our results are in contrast with the implications of earlier papers in this literature

Keywords: Environmental regulation; international trade; strategic behaviour (search for similar items in EconPapers)
JEL-codes: D60 Q56 (search for similar items in EconPapers)
Date: 2004-08-11
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Persistent link: https://EconPapers.repec.org/RePEc:ecm:feam04:547

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