Ecological dumping under foreign investment quotas
AbstractIn this paper, we examine the discrimination of emission taxes between the export and nontradable sectors in a small country. A few articles indicate that there should be no differentiation of environmental policies between sectors in a small country if the government uses indirect instruments as emission taxes. However, we show that the discrimination of emission taxes may occur in a small country that imposes foreign investment quotas. In particular, the possibility that ecological dumping occurs is higher if export goods are more labor intensive than import goods, as in developing countries. Moreover, in the case where imported goods are most capital intensive, both emission tax rates may be lower than marginal environmental damage, and ecological dumping may occur. It is also shown that easing foreign capital quotas may deteriorate the small countryfs welfare.
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Bibliographic InfoPaper 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 08-31.
Length: 25 pages
Date of creation: Sep 2008
Date of revision:
ecological dumping; emission tax; nontraded goods; international trade; capital movement;
Find related papers by JEL classification:
- F18 - International Economics - - Trade - - - Trade and Environment
- F20 - International Economics - - International Factor Movements and International Business - - - General
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