Dynamic environmental policy in developing countries with a dual economy

D. Lee and Amitrajeet Batabyal

No 2000-29, Working Papers from Utah State University, Department of Economics

Abstract: We analyze a dynamic model of environmental policy in a stylized developing country (DC) with a dual economy. This DC’s economy is distorted because the government subsidizes the exports of the non-polluting sector of the economy. We analyze the employment and output effects of three different pollution taxes. These taxes incorporate alternate assumptions about the DC government’s ability to commit to its announced course of action. We describe the taxes, we examine the dependence of these taxes on the extant distortion, and we stipulate the conditions that call for an activist policy, irrespective of the length of time to which the government can commit to its announced policy. Inter alia, our analysis shows why some DC governments may not be serious about environmental protection.

Keywords: commitment; developing country; environmental policy; export subsidy (search for similar items in EconPapers)
JEL-codes: O20 Q20 (search for similar items in EconPapers)
Pages: 30 pages
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Related works:
Chapter: DYNAMIC ENVIRONMENTAL POLICY IN DEVELOPING COUNTRIES WITH A DUAL ECONOMY (2008)
Journal Article: Dynamic environmental policy in developing countries with a dual economy (2002)
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