Environmental Policy, Intra-Industry Trade and Transfrontier Pollution
AbstractThe paper discusses effects of domestic environmental policy on foreignemissions and on transboundary pollution. We use a Dixit-Stiglitz typemodel of monopolistic competition with an endogenous number of firms.Production generates environmental externalities which spill over to theother country. It is shown that environmental policy has an impact onmarket structure at home and abroad. These market structure effectsinduce changes in emissions abroad. In contrast to what has been derivedin earlier contributions, it turns out to be possible that tighterenvironmental standards at home lead to less emissions abroad. The paperderives these results and provides the economic intuition behind them.Finally, conditions for optimal environmental policies are derived. Copyright Kluwer Academic Publishers 2000
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Bibliographic InfoArticle provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.
Volume (Year): 17 (2000)
Issue (Month): 1 (September)
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Web page: http://www.springerlink.com/link.asp?id=100263
environmental standards; intra-industry trade; market structure;
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