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Can Cross-Border Pollution Reduce Pollution?

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Author Info

  • Panos Hatzipanayotou
  • Sajal Lahiri
  • Michael S. Michael

Abstract

We develop a North-South model of foreign aid and cross-border pollution resulting from production activities in the recipient country. There is both private and public abatement of pollution, the latter being financed through emissions tax revenue and foreign aid. We characterise a Nash equilibrium where the donor country chooses the amount of aid, and the recipient chooses the fraction of aid allocated to pollution abatement and/or the emission tax rate. At this equilibrium, an increase in the donor's perceived rate of cross-border pollution reduces net emission levels.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2000/wp-cesifo-2000-11/cesifo_wp360.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 360.

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Date of creation: 2000
Date of revision:
Handle: RePEc:ces:ceswps:_360

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Keywords: Cross-border pollution; pollution abatement; foreign aid;

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References

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  1. Hatzipanayotou, Panos & Michael, Michael S., 1995. "Foreign aid and public goods," Journal of Development Economics, Elsevier, vol. 47(2), pages 455-467, August.
  2. Rodney D. Ludema & Ian Wooton, 1994. "Cross-Border Externalities and Trade Liberalization: The Strategic Control of Pollution," Canadian Journal of Economics, Canadian Economics Association, vol. 27(4), pages 950-66, November.
  3. Jota Ishikawa & Kazuharu Kiyono, 2000. "International Trade and Global Warming," CIRJE F-Series CIRJE-F-78, CIRJE, Faculty of Economics, University of Tokyo.
  4. John Beghin & David Roland-Holst & Dominique van der Mensbrugghe, 1997. "Trade and Pollution Linkages: Piecemeal Reform and Optimal Intervention," Canadian Journal of Economics, Canadian Economics Association, vol. 30(2), pages 442-55, May.
  5. Khilji, Nasir M. & Zampelli, Ernest M., 1994. "The fungibility of U.S. military and non-military assistance and the impacts on expenditures of major aid recipients," Journal of Development Economics, Elsevier, vol. 43(2), pages 345-362, April.
  6. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-37, September.
  7. Ludema, Rodney D & Wooton, Ian, 1997. "International Trade Rules and Environmental Cooperation under Asymmetric Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 605-25, August.
  8. Copeland Brian R., 1994. "International Trade and the Environment: Policy Reform in a Polluted Small Open Economy," Journal of Environmental Economics and Management, Elsevier, vol. 26(1), pages 44-65, January.
  9. Abe, Kenzo, 1992. "Tariff Reform in a Small Open Economy with Public Production," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(1), pages 209-22, February.
  10. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
  11. Merrifield, John D., 1988. "The impact of selected abatement strategies on transnational pollution, the terms of trade, and factor rewards: A general equilibrium approach," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 259-284, September.
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Citations

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Cited by:
  1. Malika Hamadi & Guillermo Baquero, 2011. "Competition, Loan Rates and Information Dispersion in Microcredit Markets," CREA Discussion Paper Series 11-17, Center for Research in Economic Analysis, University of Luxembourg.
  2. Hadjiyiannis, Costas & Hatzipanayotou, Panos & Michael, Michael S., 2013. "Competition for environmental aid and aid fungibility," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 1-11.
  3. Dirk T.G. Ruebbelke & Eytan Sheshinski, 2005. "Transfers as a Means to Combat European Spillovers," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 225(6), pages 699-710, November.
  4. Alain-Désiré Nimubona & Horatiu Rus, 2011. "Green Technology Transfers and Border Tax Adjustments," Working Papers 1102, University of Waterloo, Department of Economics, revised May 2011.
  5. Hatzipanayotou, Panos & Sajal Lahiri & Michael S.Michael, 2002. "Reforms of Environmental Policies in the presence of Cross-border Pollution and Two-stage Clean-up," Royal Economic Society Annual Conference 2002 97, Royal Economic Society.
  6. B. Mak ARVIN & Zafar KAYANI & Marisa A. SCIGLIANO, 2009. "Environmental Aid and Economic Development in the Third World," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 9(1).
  7. Beladi, Hamid & Chao, Chi-Chur & Hazari, Bharat R. & Laffargue, Jean-Pierre, 2009. "Tourism and the environment," Resource and Energy Economics, Elsevier, vol. 31(1), pages 39-49, January.
  8. Hamid Beladi & Sugata Marjit & Lei Yang, . "Outsourcing: Volume and Composition of R&D," Working Papers 0001, College of Business, University of Texas at San Antonio.
  9. Panos Hatzipanayotou & Sajal Lahiri & Michael S. Michael, 2005. "Globalization, Cross-Border Pollution and Welfare," CESifo Working Paper Series 1479, CESifo Group Munich.
  10. repec:ebl:ecbull:v:6:y:2007:i:5:p:1-8 is not listed on IDEAS
  11. Li, Jun, 2013. "Foreign aid, urbanization and green cities," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  12. Schweinberger, A.G. & Woodland, A.D., 2008. "The short and long run effects of tied foreign aid on pollution abatement, pollution and employment: A pilot model," Journal of Environmental Economics and Management, Elsevier, vol. 55(3), pages 310-325, May.
  13. Panos Hatzipanayotou & Sajal Lahiri & Michael Michael, 2008. "Cross-Border Pollution, Terms of Trade, and Welfare," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 41(3), pages 327-345, November.
  14. Takumi Haibara, 2009. "Environmental Funds, Public Abatement, and Welfare," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 44(2), pages 167-177, October.
  15. Costas Hadjiyiannis & Panos Hatzipanayotou & Michael S. Michael, 2002. "Optimal Tax Policies with Private-Public Clean-Up, Cross-Border Pollution and Capital Mobility," CESifo Working Paper Series 822, CESifo Group Munich.

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