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Pollution and Commerce Control between Emerging Countries

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  • Bravo, Salvador Sandoval
  • Ramirez, Semei Coronado

Abstract

This work presents a mathematical model for reciprocal dumping and transboundary pollution, under a setting of oligopolistic competition. To control emissions, governments can establish two environmental regulation instruments: quotas and taxes. To do so, they calculate the optimal values for these variables and implement environmental policies, which aim to maximize the welfare function for both consumers and manufacturing companies and improve tax revenue and the social cost of polluting. With this model, we are able to conclude that when the social cost of polluting is high, governments should impose a quota for the level of pollution or a tax for contaminating. However, if the cost to abate pollution is high, the government may increase the pollution quota or reduce the tax.

Suggested Citation

  • Bravo, Salvador Sandoval & Ramirez, Semei Coronado, 2014. "Pollution and Commerce Control between Emerging Countries," Asian Journal of Agricultural Extension, Economics & Sociology, Asian Journal of Agricultural Extension, Economics & Sociology, vol. 3(4).
    • Handle: RePEc:ags:ajaees:357475
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    References listed on IDEAS

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    2. Kazumi Asako, 1979. "Environmental Pollution in an Open Economy," The Economic Record, The Economic Society of Australia, vol. 55(4), pages 359-367, December.
    3. Rowthorn, R E, 1992. "Intra-industry Trade and Investment under Oligopoly: The Role of Market Size," Economic Journal, Royal Economic Society, vol. 102(411), pages 402-414, March.
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