Trade, technical progress and the environment: the role of a unilateral green tax on consumption
AbstractThe paper proposes a two-country general equilibrium model of endogenous growth and trade between two regions, North and South, with different environmental standards. Pollution is a by-product of consumption and in order to abate it the northern region unilaterally imposes a green tax on consumption. As the tax affects domestic demand of consumer goods according to their pollution intensities, regardless of where those goods are produced, the model shows that such a unilateral environmental policy can increase the speed of technological change and pollution abatement in both regions.
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Bibliographic InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 744.
Date of creation: Feb 2010
Date of revision:
Trade; environment; consumption externality; technological change;
Find related papers by JEL classification:
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F18 - International Economics - - Trade - - - Trade and Environment
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-20 (All new papers)
- NEP-ENE-2010-03-20 (Energy Economics)
- NEP-ENV-2010-03-20 (Environmental Economics)
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- Carlo Orecchia & Maria Elisabetta Tessitore, 2011. "Economic Growth and the Environment with Clean and Dirty Consumption," Working Papers 2011.57, Fondazione Eni Enrico Mattei.
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