The Demands for Environmental Regulation and for Trade in the Presence of Private Mitigation
AbstractWe study the nature of individual demands for environmental regulation and for trade openness in the general equilibrium of a small open economy where the environment is an input to production. Differences in the ability of individuals to afford private mitigation of the adverse consequences of pollution is a central feature of the analysis. Private mitigation leads to an endogenous, unequal distribution of the health-related consequences of pollution across income groups in a manner consistent with epidemiologic studies, in contrast to much of the literature which assumes equal health effects for all. We show that when private mitigation is possible at a cost, trade polarizes the interests of rich and poor with respect to the stringency of regulation. Moreover, even though trade has the potential to benefit everyone, the poor may oppose trade openness because of a concern that laxer environmental regulation will then be imposed in the interest of the rich. We explain why heterogeneity in the intensity of preferences, and not just in their direction, is likely to play a role in the determination of collective choices with respect to the regulation of the environment and of trade. We conclude by drawing out the implications of the analysis for the study of the political economy of the environment-trade-welfare nexus.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2509.
Date of creation: 2008
Date of revision:
regulation; environment; pollution; private mitigation; trade; welfare; health; collective choice;
Other versions of this item:
- Louis Hotte & Stanley L. Winer, 2008. "The Demands for Environmental Regulation and for Trade in the Presence of Private Mitigation," Working Papers 0810E, University of Ottawa, Department of Economics.
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- F18 - International Economics - - Trade - - - Trade and Environment
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- McKitrick, R. & Collinge, R.A., 1998.
"The Existence and Uniqueness of Optimal Pollution Policy in the Presence of Victim Defense Measures,"
1998-6, University of Guelph, Department of Economics and Finance.
- McKitrick, Ross & Collinge, Robert A., 2002. "The Existence and Uniqueness of Optimal Pollution Policy in the Presence of Victim Defense Measures," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 106-122, July.
- McAusland, Carol, 2003. "Voting for pollution policy: the importance of income inequality and openness to trade," Journal of International Economics, Elsevier, vol. 61(2), pages 425-451, December.
- Aidt, Toke S., 1998. "Political internalization of economic externalities and environmental policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 1-16, July.
- Chichilnisky, Graciela, 1994. "North-South Trade and the Global Environment," American Economic Review, American Economic Association, vol. 84(4), pages 851-74, September.
- Khan, M. & Matsusaka, J.G., 1995.
"Demand for Environment Goods: Evidence from Voting Patterns on California Initiatives,"
1995_08, Columbia University, Department of Economics.
- Kahn, Matthew E & Matsusaka, John G, 1997. "Demand for Environmental Goods: Evidence from Voting Patterns on California Initiatives," Journal of Law and Economics, University of Chicago Press, vol. 40(1), pages 137-73, April.
- Hettich,Walter & Winer,Stanley L., 2005. "Democratic Choice and Taxation," Cambridge Books, Cambridge University Press, number 9780521021807, December.
- Seema Jayachandran, 2009.
"Air Quality and Early-Life Mortality: Evidence from Indonesia’s Wildfires,"
Journal of Human Resources,
University of Wisconsin Press, vol. 44(4).
- Seema Jayachandran, 2008. "Air Quality and Early-Life Mortality: Evidence from Indonesia's Wildfires," NBER Working Papers 14011, National Bureau of Economic Research, Inc.
- Coughlin, Peter & Nitzan, Shmuel, 1981. "Electoral outcomes with probabilistic voting and Nash social welfare maxima," Journal of Public Economics, Elsevier, vol. 15(1), pages 113-121, February.
- Jamie Pearce & Simon Kingham & Peyman Zawar-Reza, 2006. "Every breath you take? Environmental justice and air pollution in Christchurch, New Zealand," Environment and Planning A, Pion Ltd, London, vol. 38(5), pages 919-938, May.
- Verdier, Thierry, 2004. "Socially Responsible Trade Integration: A Political Economy Perspective," CEPR Discussion Papers 4699, C.E.P.R. Discussion Papers.
- Fredriksson, Per G., 1997. "The Political Economy of Pollution Taxes in a Small Open Economy," Journal of Environmental Economics and Management, Elsevier, vol. 33(1), pages 44-58, May.
- Hanna, Brid Gleeson, 2007. "House values, incomes, and industrial pollution," Journal of Environmental Economics and Management, Elsevier, vol. 54(1), pages 100-112, July.
- Rosado, Marcia A. & Cunha-E-S , Maria A. & Ducla-Soares, Maria M. & Nunes, Luis C., 2006. "Combining averting behavior and contingent valuation data: an application to drinking water treatment in Brazil," Environment and Development Economics, Cambridge University Press, vol. 11(06), pages 729-746, December.
- Brooks, Nancy & Sethi, Rajiv, 1997. "The Distribution of Pollution: Community Characteristics and Exposure to Air Toxics," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 233-250, February.
- Schleich, Joachim, 1999. "Environmental quality with endogenous domestic and trade policies1," European Journal of Political Economy, Elsevier, vol. 15(1), pages 53-71, March.
- Pethig, Rudiger, 1976. "Pollution, welfare, and environmental policy in the theory of Comparative Advantage," Journal of Environmental Economics and Management, Elsevier, vol. 2(3), pages 160-169, February.
- Louis Hotte, 2010.
"Democracy, inequality and the environment when citizens can mitigate privately or act collectively,"
1007E, University of Ottawa, Department of Economics.
- Sophie Bernard & Louis Hotte & Stanley L. Winer, 2010. "Democracy, Inequality and the Environment when Citizens can Mitigate Privately or Act Collectively," CESifo Working Paper Series 3241, CESifo Group Munich.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).
If references are entirely missing, you can add them using this form.