Trade, Strategic Innovation and Strategic Environmental Policy - a General Analysis
AbstractThere has been much debate recently about the nature of environmental policy that will be set by governments concerned about the competitive advantage their industries might obtain in a world of fierce trade competition. Some claim governments will set environmental policies that are too lax, while others claim that policies will be excessively tough (in order to spur firms to innovate). Both these claims relate to the possibility that governments may distort their environmental policies for strategic reasons, and to test these claims requires modelling environmental policy in a world of imperfect competition where there are strategic gains to governments trying to manipulate markets through their environmental policies, and to producers trying to manipulate markets through their R&D decisions.There is now a considerable literature which adapts the literature on strategic international trade to include environmental policy, but this literature suffers from some limitations. Most of the models consider the cases where either only governments act strategically or only producers act strategically. A proper analysis would allow for both sets of agents to act strategically. This is done in Ulph (1993a), and in Ulph (1994). In this paper we provide a more general treatment of the issues. We allow for both governments and producers to act strategically, and for producers' R&D to reduce both costs of production and emissions, but without imposing special functional forms. We show that despite this extra generality the papers by Ulph (1993a) and Ulph (1994) effectively encompass the entire set of qualitative results that can be obtained.
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 C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1063.
Date of creation: Nov 1994
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Stähler, Frank, 1998. "Competitiveness and environmental policies in strategic environmental policy models," Kiel Working Papers 858, Kiel Institute for the World Economy.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.