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Environmental Policy in Open Economies and Monopolistic Competition

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  • Alexander Haupt

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Abstract

This paper analyses the implications of international trade for non-cooperative environmental policy in the case of local production externalities. A particular focus is on the potential effects of regulations on the variety of goods and the resulting international spillover caused by trade. A tougher domestic standard negatively affects the utility of the households abroad, since such a policy reduces their variety of imports (due to fewer domestic product inventions) or their consumption of each imported brand (due to higher import prices). Ignoring the negative spillover, non-cooperative governments implement inefficiently strict standards in equilibrium. In contrast to this clear-cut inefficiency result, the impact of international trade on the state of the environment is ambiguous. Copyright Springer 2006

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File URL: http://hdl.handle.net/10.1007/s10640-005-2645-x
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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental & Resource Economics.

Volume (Year): 33 (2006)
Issue (Month): 2 (02)
Pages: 143-167

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Handle: RePEc:kap:enreec:v:33:y:2006:i:2:p:143-167

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Web page: http://www.springerlink.com/link.asp?id=100263

Related research

Keywords: environmental policy; international trade; monopolistic competition; open economies; process standards; Q28; F13; F12;

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Cited by:
  1. Kreickemeier, Udo & Richter, Philipp M., 2012. "Trade and the environment: The role of firm heterogeneity," University of Tuebingen Working Papers in Economics and Finance 36, University of Tuebingen, Faculty of Economics and Social Sciences.
  2. Giuseppe Francesco Gori & Luca Lambertini, 2012. "Trade Liberalisation between Asymmetric Countries with Environmentally Concerned Consumers," Working Paper Series 40_12, The Rimini Centre for Economic Analysis.

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