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Do positive agricultural externalities provide a justification against trade liberalisation?

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  • Thilo W. Glebe

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    (Environmental Economics and Agricultural Policy Group, Technical University of Munich)

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    Abstract

    This paper analyses the welfare effects of agricultural trade liberalisation when taking into account the positive environmental externalities of European farming. We show that free trade is suboptimal, if no efficient environmental policy addressing the provision of multifunctional amenities is implemented. However, tariff reductions in a net-importing country will increase the incentive for introducing an environmental policy, though this policy will be strategically distorted. Despite its strategic character, introducing an optimal environmental policy, when simultaneously abolishing a tariff policy in an importing country, will unambiguously enhance global welfare.

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    Bibliographic Info

    Paper provided by Technische Universität München, Environmental Economics and Agricultural Policy Group in its series Discussion Papers with number 062005.

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    Length: 14 pages
    Date of creation: Jun 2005
    Date of revision:
    Publication status: Published in Cahiers d'Economie et Sociologie Rurales. No. 82-83, 57-72. (title: Agricultural multifunctionality and trade liberalisation; revised version)
    Handle: RePEc:tuu:papers:062005

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    Related research

    Keywords: Agricultural trade; agricultural multifunctionality; strategic environmental policy;

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    1. Rauscher, Michael, 1994. "On Ecological Dumping," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 822-40, Supplemen.
    2. P. Lynn Kennedy & Won W. Koo & Mary A. Marchant, 1999. "Key Issues and Challenges for the 1999 World Trade Organization Agriculture Round," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 1134-1141.
    3. Krutilla, Kerry, 1991. "Environmental regulation in an open economy," Journal of Environmental Economics and Management, Elsevier, vol. 20(2), pages 127-142, March.
    4. Jeffrey M. Peterson & Richard N. Boisvert & Harry de Gorter, 2002. "Environmental policies for a multifunctional agricultural sector in open economies," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(4), pages 423-443, December.
    5. Markusen, James R., 1975. "International externalities and optimal tax structures," Journal of International Economics, Elsevier, vol. 5(1), pages 15-29, February.
    6. Kyle Bagwell & Robert W. Staiger, 2001. "The WTO as a Mechanism for Securing Market Access Property Rights: Implications for Global Labor and Environmental Issues," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 69-88, Summer.
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