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The Political Economy of Tariffs and Environmental Standards

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  • Yu-Bong Lai

Abstract

This paper highlights the effects of the structures of games on interest groups' lobbying behavior. When policies are determined simultaneously, environmentalists prefer a higher tariff and a stricter environmental product standard, in order to hinder imports of a good that generate negative consumption-type externalities. In a sequential game, where the tariff is determined first, environmentalists will attempt to reduce the tariff. A reduction in the tariff tightens the environmental standard, which has a stronger trade-restrictive effect. To take advantage of the stronger trade-restrictive effect of environmental regulation, environmentalists will strategically lobby for a lower tariff barrier.

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Bibliographic Info

Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

Volume (Year): 161 (2005)
Issue (Month): 3 (September)
Pages: 473-

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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200509)161:3_473:tpeota_2.0.tx_2-n

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Web page: http://www.mohr.de/jite

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Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany
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Cited by:
  1. Per G. Fredriksson & Xenia Matschke, 2014. "Trade Liberalization and Environmental Taxation in Federal Systems," Research Papers in Economics 2014-04, University of Trier, Department of Economics.

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