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Strategic Environmental Policies when Waste Products are Tradable

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  • James Cassing
  • Thomas Kuhn

Abstract

The paper deals with international trade in hazardous waste products when there is an international oligopoly market for waste, and both waste-importing and waste-exporting countries act strategically to utilize national environmental policies to attach rents arising from trade in waste. The authors model a multiple-stage game where waste is generated in an industrialized country as a byproduct of production, and potentially is exported to some less-developed countries, if not abated locally, or imposed on local residents at a cost of an environmental tax. In the market for waste, an oligopolistic supply is assumed. The demand for waste is perfectly competitive, with waste-processing firms guided by marginal disposal costs and environmental taxes levied by foreign countries. With each country playing Nash, the analysis finds domestic and foreign taxes to be distorted from the Pigouvian taxes in such a way that the domestic (waste-exporter) tax rate is set below, and the foreign tax rate is set above, the Pigouvian taxes. However, a global welfare optimum requires tax distortions in the opposite direction, in the sense that foreign environmental taxes must be set below the Pigouvian tax rate. Copyright Blackwell Publishing Ltd 2003.

Suggested Citation

  • James Cassing & Thomas Kuhn, 2003. "Strategic Environmental Policies when Waste Products are Tradable," Review of International Economics, Wiley Blackwell, vol. 11(3), pages 495-511, August.
  • Handle: RePEc:bla:reviec:v:11:y:2003:i:3:p:495-511
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    Citations

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    Cited by:

    1. Shuichi Ohori, 2006. "Optimal Environmental Tax and Level of Privatization in an International Duopoly," Journal of Regulatory Economics, Springer, vol. 29(2), pages 225-233, March.
    2. Roland Kirstein, 2007. "Internationaler Müllhandel aus Sicht der ökonomischen Analyse des Rechts," FEMM Working Papers 07021, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    3. M. Dubois & J. Eyckmans, 2015. "Efficient Waste Management Policies and Strategic Behavior with Open Borders," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 907-923, December.
    4. Kenji Fujiwara, 2010. "Strategic Environmental Policies and the Gains from Trade Liberalization," Review of Development Economics, Wiley Blackwell, vol. 14(2), pages 360-373, May.
    5. Honma, Satoshi, 2013. "Optimal policies for international recycling between developed and developing countries," MPRA Paper 43703, University Library of Munich, Germany.
    6. Higashida, Keisaku & Jinji, Naoto, 2006. "Strategic use of recycled content standards under international duopoly," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 242-257, March.
    7. Sawhney, Aparna & Majumder, Piyali, 2015. "Is India becoming a waste haven of metal scrap?," MPRA Paper 67186, University Library of Munich, Germany.
    8. Keisaku Higashida, 2012. "Trade in Secondhand Goods, Monitoring of Illegal Trade, and Import Quotas on Legal Trade," Discussion Paper Series 90, School of Economics, Kwansei Gakuin University, revised Jun 2012.
    9. Hajime Sugeta & Takayoshi Shinkuma, 2012. "International trade in recycled materials in vertically related markets," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(4), pages 357-382, October.
    10. Chen, Yenming & Wu, Tien-Hua, 2010. "Effective e-waste management-The role of international cooperation and fragementation," MPRA Paper 25902, University Library of Munich, Germany.
    11. Kirstein, Roland, 2004. "Internationaler Müllhandel: Eine institutionenökonomische Analyse," CSLE Discussion Paper Series 2004-03, Saarland University, CSLE - Center for the Study of Law and Economics.

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