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Strategic Environmental Policies and the Gains from Trade Liberalization

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  • Kenji Fujiwara

    ()
    (Kwansei Gakuin University)

Abstract

The literature on strategic environmental policy has not fully addressed welfare effects of trade liberalization from autarky. In a reciprocal market model of duopoly with transboundary pollution, we study how reductions in transport costs and import tariffs affect the Nash equilibrium welfare of an environmental policy game as compared to any initial state including autarky. We show three patterns of gainfulness of trade depending on the interaction between marginal damage from pollution and the degree of transboundary pollution.

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File URL: http://192.218.163.163/RePEc/pdf/kgdp54.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by School of Economics, Kwansei Gakuin University in its series Discussion Paper Series with number 54.

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Length: 24 pages
Date of creation: Apr 2010
Date of revision: Apr 2010
Handle: RePEc:kgu:wpaper:54

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Cited by:
  1. Alain-Désiré Nimubona, 2012. "Pollution Policy and Trade Liberalization of Environmental Goods," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 53(3), pages 323-346, November.

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