Market integration, environmental policy, and transboundry pollution from consumption
AbstractRecent empirics report that transport cost reductions significantly contribute to rapidly growing world trade. This article develops a reciprocal market model of intra-industry trade with transboundary pollution from consumption to consider how market integration in the form of transport cost reductions affects the noncooperative choice of an environmental policy and the equilibrium welfare. I show that market integration can improve welfare locally, but that welfare under any non-prohibitive trade cost can not be higher than welfare under autarky. This possibility of trade losses exhibits a sharp contrast to the case of production-generated pollution.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal The Journal of International Trade & Economic Development.
Volume (Year): 21 (2012)
Issue (Month): 4 (July)
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Web page: http://www.tandfonline.com/RJTE20
Other versions of this item:
- Kenji Fujiwara, 2010. "Market integration, environmental policy, and transboundry pollution from consumption," Discussion Paper Series 62, School of Economics, Kwansei Gakuin University, revised Nov 2010.
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