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Export Processing Zones and Environmental Policy

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  • Yasuyuki Sugiyama

    ()
    (Graduate School of Economics, Osaka University)

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    Abstract

    This paper investigates the relation between an export processing zone and a pollution quota in a small country. The model suppose that the pollution target is implemented with a marketable permit system, and the government sets the quota to maximize domestic welfare. Then we show that, if an increase in real income reduces marginal external damage, the pollution quota is relieved by the formation of an export processing zone. However, if the marginal damage is augmented with an increase in the income, the optimal quota might be strengthened by the formation of the zone.

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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0622.pdf
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    Bibliographic Info

    Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 06-22.

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    Length: 21 pages
    Date of creation: Aug 2006
    Date of revision:
    Handle: RePEc:osk:wpaper:0622

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    Web page: http://www.econ.osaka-u.ac.jp/
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    Keywords: export processing zone; international trade; environmental policy; pollution;

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    1. Din, Musleh-ud, 1994. "Export processing zones and backward linkages," Journal of Development Economics, Elsevier, vol. 43(2), pages 369-385, April.
    2. Brian R. Copeland & M. Scott Taylor, 2003. "Trade, Growth and the Environment," NBER Working Papers 9823, National Bureau of Economic Research, Inc.
    3. Miyagiwa, Kaz F., 1986. "A reconsideration of the welfare economics of a free-trade zone," Journal of International Economics, Elsevier, vol. 21(3-4), pages 337-350, November.
    4. Madani, Dorsati, 1999. "A review of the role and impact of export processing zones," Policy Research Working Paper Series 2238, The World Bank.
    5. Devereux, John & Chen, Lein Lein, 1995. "Export Zones and Welfare: Another Look," Oxford Economic Papers, Oxford University Press, vol. 47(4), pages 704-13, October.
    6. 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.
    7. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-37, September.
    8. Albert G. Schweinberger, 2003. "Special economic zones and quotas on imported intermediate goods: a policy proposal," Oxford Economic Papers, Oxford University Press, vol. 55(4), pages 696-715, October.
    9. Hamada, Koichi, 1974. "An economic analysis of the duty-free zone," Journal of International Economics, Elsevier, vol. 4(3), pages 225-241, August.
    10. Beladi, Hamid & Chao, Chi-Chur & Frasca, Ralph, 1999. "Foreign investment and environmental regulations in LDCs," Resource and Energy Economics, Elsevier, vol. 21(2), pages 191-199, May.
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