Free-Riding, Carbon Treaties and Trade Wars: the Role of Domestic Environmental Policies
AbstractThis paper uses a calibrated general-equilibrium model of North-South trade with carbon emissions to explore the strategic, open-economy implications of price and quantity based instruments for CO2 emission reduction. We compute non-cooperative environmental and trade policy equilibria and Nash bargaining outcomes in environmental policies with side payments of cash. Results show that quotas can lead to higher internalization levels in a non- cooperative zero-tariff equilibrium in comparison with emission fees. If tariffs are also chosen non-cooperatively, the form of policy instrument used affects equilibrium tariffs, with quotas leading to lower trade barriers, particularly under a regional carbon treaty.
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Bibliographic InfoPaper provided by Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick in its series CSGR Working papers series with number 09/98.
Date of creation: Jul 1998
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International Free-Riding; Carbon Treaties; Tariff Wars.;
Other versions of this item:
- Abrego, Lisandro & Perroni, Carlo, 1999. "Free-riding, carbon treaties, and trade wars: the role of domestic environmental policies," Journal of Development Economics, Elsevier, vol. 58(2), pages 463-483, April.
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