Harmonizing Emissions Policy in Symmetric Countries: Improve the Environment, Improve Welfare?
AbstractWe show that harmonizing emissions policy may be bad for the environment and/or global welfare, even when pollution is transboundary and countries are identical in every way. Harmonization effectively internalizes the transboundary aspects of pollution. But it also hampers producersâ€™ ability to avoid local tailpipe regulation via exports of dirty goods and thereby redistributes incidence between producers and consumers. We develop a generic treatment of the political economy of environmental regulation to examine these competing effects. We find that whether harmonization makes politically motivated governments prefer stricter or weaker policy depends on their constituentsâ€™ vested interests and the degree of transboundary pollution transmission.
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Bibliographic InfoPaper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number qt4cj0392t.
Date of creation: 29 Oct 2003
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trade; environment; harmonization; political economy;
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