IDEAS home Printed from https://ideas.repec.org/p/tsa/wpaper/0007eco.html
   My bibliography  Save this paper

A Holistic View of Trade, Pollution Permits and Abatement

Author

Listed:
  • Hamid Beladi

    (University of Texas at San Antonio)

  • Lu Liu

    (Southwestern University of Finance and Economics, China)

  • Reza Oladi

    (Department of Applied Economics)

Abstract

By constructing a dynamic general equilibrium model this paper studies the optimal pollution emission and abatement policies for a small economy. We show that in autarky government issues an optimal level of emission permits but its optimal abatement level is zero at the unique steady- state equilibrium. On the other hand, government employs an optimal two-dimensional policy with free trade if the country is an exporter of a pollution intensive good. That is, government issues pollution permits (thus controls the emission level) while it undertakes a positive level of abatement activity. In other words, an optimal combination of emission cap and pollution abatement is required for a small trading economy with comparative advantage in dirty goods.

Suggested Citation

  • Hamid Beladi & Lu Liu & Reza Oladi, 2011. "A Holistic View of Trade, Pollution Permits and Abatement," Working Papers 0002, College of Business, University of Texas at San Antonio.
    • Handle: RePEc:tsa:wpaper:0007eco
    as

    Download full text from publisher

    File URL: http://interim.business.utsa.edu/wps/eco/0002ECO-414-2011.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chi‐Chur Chao & Eden S.H. Yu, 2000. "TRIMs, environmental taxes, and foreign investment," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 33(3), pages 799-817, August.
    2. Amitrajeet A. Batabyal & Dug Man Lee, 2008. "Dynamic Environmental Policy In Developing Countries With A Dual Economy," World Scientific Book Chapters, in: Dynamic And Stochastic Approaches To The Environment And Economic Development, chapter 10, pages 165-187, World Scientific Publishing Co. Pte. Ltd..
    3. Beladi, Hamid & Oladi, Reza, 2011. "Does trade liberalization increase global pollution?," Resource and Energy Economics, Elsevier, vol. 33(1), pages 172-178, January.
    4. Chander, Parkash & Khan, M. Ali, 2001. "International treaties on trade and global pollution," International Review of Economics & Finance, Elsevier, vol. 10(4), pages 303-324, December.
    5. Batabyal, Amitrajeet A., 1998. "Developing countries and international environmental agreements: The case of perfect correlation," International Review of Economics & Finance, Elsevier, vol. 7(1), pages 85-102.
    6. Mohtadi, Hamid, 1992. "Environment, trade, and strategic interdependence: A simple model with implications for NAFTA," The North American Journal of Economics and Finance, Elsevier, vol. 3(2), pages 175-186.
    7. Horst Siebert, 1977. "Environmental Quality And The Gains From Trade," Kyklos, Wiley Blackwell, vol. 30(4), pages 657-673, November.
    8. James R. MARKUSEN, 2021. "International Externalities And Optimal Tax Structures," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 16, pages 341-355, World Scientific Publishing Co. Pte. Ltd..
    9. Dockner Engelbert J. & Van Long Ngo, 1993. "International Pollution Control: Cooperative versus Noncooperative Strategies," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 13-29, July.
    10. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-737, September.
    11. Benchekroun, Hassan & van Long, Ngo, 1998. "Efficiency inducing taxation for polluting oligopolists," Journal of Public Economics, Elsevier, vol. 70(2), pages 325-342, November.
    12. Eglin, Richard, 2001. "Keeping the "T" in the WTO: where to next on environment and labor standards?," The North American Journal of Economics and Finance, Elsevier, vol. 12(2), pages 173-191, July.
    13. Pethig, Rudiger, 1976. "Pollution, welfare, and environmental policy in the theory of Comparative Advantage," Journal of Environmental Economics and Management, Elsevier, vol. 2(3), pages 160-169, February.
    14. Siebert, Horst, 1977. "Environmental Quality and the Gains from Trade," Kyklos, Wiley Blackwell, vol. 30(4), pages 657-673.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Haixiao Huang, Walter C. Labys, 2002. "Environment and trade: a review of issues and methods," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 2(1/2), pages 100-160.
    2. Brian R. Copeland & M. Scott Taylor, 2004. "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 7-71, March.
    3. Beladi, Hamid & Oladi, Reza, 2011. "Does trade liberalization increase global pollution?," Resource and Energy Economics, Elsevier, vol. 33(1), pages 172-178, January.
    4. Rauscher, Michael, 2001. "International trade, foreign investment, and the environment," Thuenen-Series of Applied Economic Theory 29, University of Rostock, Institute of Economics.
    5. Siebert, Horst, 1979. "Environmental policy in the two-country-case," Open Access Publications from Kiel Institute for the World Economy 3526, Kiel Institute for the World Economy (IfW Kiel).
    6. Anriquez, Gustavo, 2002. "Trade And The Environment: An Economic Literature Survey," Working Papers 28598, University of Maryland, Department of Agricultural and Resource Economics.
    7. Gulati, Sumeet, 2003. "The Effect Of Free Trade On Pollution Policy And Welfare," Working Papers 15849, University of British Columbia, Food and Resource Economics.
    8. Nordström, Håkan & Vaughan, Scott, 1999. "Trade and the environment," WTO Special Studies, World Trade Organization (WTO), Economic Research and Statistics Division, volume 4, number 4.
    9. Unteroberdoerster, Olaf, 2001. "Trade and Transboundary Pollution: Spatial Separation Reconsidered," Journal of Environmental Economics and Management, Elsevier, vol. 41(3), pages 269-285, May.
    10. Al Khourdajie, Alaa & Finus, Michael, 2020. "Measures to enhance the effectiveness of international climate agreements: The case of border carbon adjustments," European Economic Review, Elsevier, vol. 124(C).
    11. Zaman, Rubaiya, 2012. "CO2 Emissions, Trade Openness and GDP Percapita : Bangladesh Perspective," MPRA Paper 48515, University Library of Munich, Germany.
    12. Todd Sanderson & Fredoun Z. Ahmadi‐Esfahani, 2009. "Testing Comparative Advantage in Australian Broadacre Agriculture Under Climate Change: Theoretical and Empirical Models," Economic Papers, The Economic Society of Australia, vol. 28(4), pages 346-354, December.
    13. Simone Marsiglio & Nahid Masoudi, 2019. "Transboundary Pollution Control and Competitiveness Concerns in a Two-Country Differential Game," CFDS Discussion Paper Series 2019/1, Center for Financial Development and Stability at Henan University, Kaifeng, Henan, China.
    14. Quiroga, Miguel & Sterner, Thomas & Persson, Martin, 2007. "Have Countries with Lax Environmental Regulations a Comparative Advantage in Polluting Industries?," RFF Working Paper Series dp-07-08, Resources for the Future.
    15. Edward Manderson & Richard Kneller, 2012. "Environmental Regulations, Outward FDI and Heterogeneous Firms: Are Countries Used as Pollution Havens?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(3), pages 317-352, March.
    16. Osei, Edward, 1994. "Papers on the role of natural resources in international trade," ISU General Staff Papers 1994010108000011499, Iowa State University, Department of Economics.
    17. Yiyi Ju, 2017. "Tracking the PM2.5 inventories embodied in the trade among China, Japan and Korea," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 6(1), pages 1-16, December.
    18. Yuquing Xing & Charles Kolstad, 2002. "Do Lax Environmental Regulations Attract Foreign Investment?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(1), pages 1-22, January.
    19. Guan, Dabo & Hubacek, Klaus, 2007. "Assessment of regional trade and virtual water flows in China," Ecological Economics, Elsevier, vol. 61(1), pages 159-170, February.
    20. Josh Ederington & Arik Levinson & Jenny Minier, 2005. "Footloose and Pollution-Free," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 92-99, February.

    More about this item

    Keywords

    Pollution permits; abatement; international trade;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tsa:wpaper:0007eco. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wendy Frost (email available below). General contact details of provider: https://edirc.repec.org/data/cbutsus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.