Market integration, environmental policy, and transboundry pollution from consumption
AbstractRecent empirics report that transport cost reductions signi cantly contribute to rapidly growing world trade. This paper develops a reciprocal market model of intra-industry trade with transboundary pollution from consumption to consider how market integration in the form of transport cost reductions a ects the noncooperative choice of an environmental policy and the equilibrium welfare. I show that market integration can improve welfare locally, but that welfare under any non-prohibitive trade cost can not be higher than welfare under autarky. This possibility of trade losses exhibits a sharp contrast to the case of production-generated pollution.
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Bibliographic InfoPaper provided by School of Economics, Kwansei Gakuin University in its series Discussion Paper Series with number 62.
Length: 18 pages
Date of creation: Nov 2010
Date of revision: Nov 2010
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transboundary pollution; consumption-generated pollution; gains from trade; environmental policy;
Other versions of this item:
- Kenji Fujiwara, 2012. "Market integration, environmental policy, and transboundry pollution from consumption," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(4), pages 603-614, July.
- NEP-ALL-2010-11-20 (All new papers)
- NEP-ENE-2010-11-20 (Energy Economics)
- NEP-ENV-2010-11-20 (Environmental Economics)
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