Trade sanctions and green trade liberalization
AbstractThis paper studies the impact of a WTO withdrawal of trade concessions against countries that fail to respect globally recognized environmental standards. We show that a punishing tariff can be effective when environmental and trade policies are endogenous. When required standards lie within a reasonable range, compliance along with free trade as a reward is the unique equilibrium outcome. A positive optimal tariff in the case of non-compliance prevents pollution-motivated delocation, but only works as a successful credible threat and does not emerge in equilibrium. Results are consistent with broad empirical evidence that disputes the pollution haven hypothesis and suggests capital movements to be non-pollution related.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Environment and Development Economics.
Volume (Year): 15 (2010)
Issue (Month): 04 (August)
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Other versions of this item:
- Alireza Naghavi, 2008. "Trade Sanctions and Green Trade Liberalization," Center for Economic Research (RECent), University of Modena and Reggio E., Dept. of Economics 011, University of Modena and Reggio E., Dept. of Economics.
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F18 - International Economics - - Trade - - - Trade and Environment
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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