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Emissions trading of global and local pollutants, pollution havens and free riding

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Author Info

  • Silva, Emilson C.D.
  • Zhu, Xie

Abstract

In the presence of local (sulfur) and global (carbon) pollutants, we examine the pollution haven hypothesis and free riding behavior. Under domestic emissions trading, poorer Southern countries become pollution havens when free trade opens up whenever sulfur damage functions are linear or when sulfur levels in equilibrium are not higher in the South. With global trading of carbon permits, the pollution haven effect emerges in equilibrium whenever the convex sulfur damage functions are nonlinear. Countries that do not participate in a Global Protocol designed to reduce carbon emissions enjoy double benefits, stemming from free riding and cleaner local environments.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 58 (2009)
Issue (Month): 2 (September)
Pages: 169-182

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Handle: RePEc:eee:jeeman:v:58:y:2009:i:2:p:169-182

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Web page: http://www.elsevier.com/locate/inca/622870

Related research

Keywords: Emissions trading Pollution haven Global and local pollutants Free riding;

References

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  1. Brian R. Copeland & M. Scott Taylor, 2000. "Free Trade and Global Warming: A Trade Theory View of the Kyoto Protocol," NBER Working Papers 7657, National Bureau of Economic Research, Inc.
  2. Josh Ederington & Arik Levinson & Jenny Minier, 2003. "Footloose and Pollution-Free," NBER Working Papers 9718, National Bureau of Economic Research, Inc.
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  4. Wu Xiaodong, 2003. "Pollution Havens and the Regulation of Multinationals with Asymmetric Information," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(2), pages 1-27, December.
  5. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-37, September.
  6. Brian R. Copeland & M. Scott Taylor, 2003. "Trade, Growth and the Environment," NBER Working Papers 9823, National Bureau of Economic Research, Inc.
  7. Caplan, Arthur J. & Silva, Emilson C.D., 2005. "An efficient mechanism to control correlated externalities: redistributive transfers and the coexistence of regional and global pollution permit markets," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 68-82, January.
  8. Alberto Gallegos & Pierre Regibeau, 2004. "Managed Trade, Trade Liberalisation and Local Pollution," Economics Discussion Papers 580, University of Essex, Department of Economics.
  9. Hoel, Michael, 1991. "Global environmental problems: The effects of unilateral actions taken by one country," Journal of Environmental Economics and Management, Elsevier, vol. 20(1), pages 55-70, January.
  10. Arthur J. Caplan & Richard C. Cornes & Emilson C. D. Silva, 2003. "An ideal Kyoto protocol: emissions trading, redistributive transfers and global participation," Oxford Economic Papers, Oxford University Press, vol. 55(2), pages 216-234, April.
  11. Michida, Etsuyo & Nishikimi, Koji, 2007. "North-South trade and industry-specific pollutants," Journal of Environmental Economics and Management, Elsevier, vol. 54(2), pages 229-243, September.
  12. Fredriksson, Per G. & List, John A. & Millimet, Daniel L., 2003. "Bureaucratic corruption, environmental policy and inbound US FDI: theory and evidence," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1407-1430, August.
  13. Arik Levinson & M. Scott Taylor, 2008. "Unmasking The Pollution Haven Effect," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 223-254, 02.
  14. Silva, Emilson C.D. & Zhu, Xie, 2008. "On the efficiency of a global market for carbon dioxide emission permits: Type of externality and timing of policymaking," Economics Letters, Elsevier, vol. 100(2), pages 213-216, August.
  15. Bohm Peter, 1993. "Incomplete International Cooperation to Reduce CO2 Emissions: Alternative Policies," Journal of Environmental Economics and Management, Elsevier, vol. 24(3), pages 258-271, May.
  16. Golombek Rolf & Hoel Michael, 2004. "Unilateral Emission Reductions and Cross-Country Technology Spillovers," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(2), pages 1-27, September.
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Citations

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Cited by:
  1. Rabindra N. Bhattacharya & Rupayan Pal, . "Environmental standards as strategic outcomes: A Simple model," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2008-028, Indira Gandhi Institute of Development Research, Mumbai, India.
  2. Snorre Kverndokk & Eric Nævdal & Linda Nøstbakken, 2013. "The Trade-off between Intra- and Intergenerational Equity in Climate Policy," CESifo Working Paper Series 4285, CESifo Group Munich.
  3. Zhang, Junjie & Wang, Can, 2011. "Co-benefits and additionality of the clean development mechanism: An empirical analysis," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 140-154, September.
  4. Rupayan Pal & Bibhas Saha, 2011. "Environmental outcomes in a model of mixed duopoly," University of East Anglia Applied and Financial Economics Working Paper Series 030, School of Economics, University of East Anglia, Norwich, UK..
  5. Baomin Dong & Jiong Gong & Xin Zhao, 2012. "FDI and environmental regulation: pollution haven or a race to the top?," Journal of Regulatory Economics, Springer, vol. 41(2), pages 216-237, April.

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