Trade, Transboundary Pollution, and Foreign Lobbying

Victoria I Umansyaya and Edward Barbier
Authors registered in the RePEc Author Service: Charles F. Mason

No 71, OxCarre Working Papers from Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford

Abstract: In this paper, we explore the use of trade policy in addressing transboundary stock pollution problems such as acid rain and water pollution. We show that a tariff determined by the current level of accumulated pollution can induce the time path of emissions optimal for the downstream (polluted) country. But if the upstream (polluting) country can lobby the downstream government to impose lower tariffs, distortions brought by corruption and foreign lobbying lead to a rise in the upstream country’s social welfare, and to a decrease in social welfare in the downstream country. Thus, the usefulness of trade policy as a tool for encouraging cooperation and internalizing transboundary externalities depends critically on the degree of governments’ susceptibility to foreign political influence.

JEL-codes: D72 F18 F59 Q56 (search for similar items in EconPapers)
Date: 2011-11-24
New Economics Papers: this item is included in nep-env
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Journal Article: Trade, Transboundary Pollution, and Foreign Lobbying (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:oxf:oxcrwp:071

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