Trade Liberalization and Environmental Taxation in Federal Systems
AbstractThe literature on trade liberalization and environment has not considered federal structures. This paper shows how the design of environmental policy in a federal system has implications for the effects of trade reform. Trade liberalization leads to a decline in pollution taxes regardless of whether pollution taxes are set at the federal (centralized) or local (decentralized) level, and it increases social welfare. The effect under a decentralized system is smaller than if these taxes are set by the federal government, and pollution emissions therefore decline in this case. Moreover, majority bias interacts with trade liberalization if federal taxes are used.
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Bibliographic InfoPaper provided by University of Trier, Department of Economics in its series Research Papers in Economics with number 2014-04.
Length: 23 pages
Date of creation: 2014
Date of revision:
trade and environment; environmental policy; trade liberalization; environmental federalism; political economy; majority bias; social welfare;
Other versions of this item:
- Per G. Fredriksson & Xenia Matschke, 2014. "Trade Liberalization and Environmental Taxation in Federal Systems," CESifo Working Paper Series 4717, CESifo Group Munich.
- F1 - International Economics - - Trade
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-03-15 (All new papers)
- NEP-ENE-2014-03-15 (Energy Economics)
- NEP-ENV-2014-03-15 (Environmental Economics)
- NEP-INT-2014-03-15 (International Trade)
- NEP-RES-2014-03-15 (Resource Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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