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Environmental Policy And Trade Liberalization: The Case Of Transboundary Pollution From Consumption

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  • Kenji Fujiwara

    ()
    (Kwansei Gakuin University)

Abstract

This paper develops a reciprocal market model of international duopoly with transboundary pollution from consumption to examine the effects of bilateral tariff reductions on the equilibrium pollution tax and welfare. We show that tariff reductions induce each country to raise an emission tax and that trade liberalization is welfare-improving if the parameter of pollution damages is suciently large. These results are in contrast to the case of production-generated pollution and we seek the reason for this contrast.

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File URL: http://192.218.163.163/RePEc/pdf/kgdp61.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 61.

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Length: 23 pages
Date of creation: Nov 2010
Date of revision: Nov 2010
Handle: RePEc:kgu:wpaper:61

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Keywords: consumption-generated pollution; tariff reduction; emission tax; international duopoly.;

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