We develop a two-country model of foreign aid and cross-border pollution resulting from production activities in the recipient country. There is both private and public abatement of pollution, the latter being financed through emissions tax revenue and foreign aid. We characterize a Nash equilibrium in which the donor country chooses the amount of aid and the recipient chooses the fraction of aid allocated to pollution abatement and the emission tax rate. At this equilibrium, an increase in the donor's perceived rate of cross-border pollution reduces emission levels.
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Volume (Year): 35 (2002) Issue (Month): 4 (November) Pages: 805-818 Download reference. The following formats are available: HTML
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Find related papers by JEL classification: Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy F35 - International Economics - - International Finance - - - Foreign Aid H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
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Hamid Beladi & Chi-Chur Chao & Bharat R. Hazari, .
"Tourism and the Environment,"
Working Papers
0001, College of Business, University of Texas at San Antonio.
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