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Optimal Pollution Standard in an Open Economy: Characterizing Environmental Diversity


  • Das, Satya P


The paper examines the optimal pollution standard for a large open economy. Using a two-country partial-equilibrium framework, the optimal standards are characterized for autarky, free trade, and free trade together with cooperation among countries in setting standards. If pollution is local, at the free-trade equilibrium, the exporting country imposes a stricter standard than does the importing country. The ranking may be reversed if pollution is transnational. A surprising implication is that if pollution is local, cooperation may imply a less stringent standard for both the exporting country and the importing country. Copyright 2001 by Blackwell Publishing Ltd.

Suggested Citation

  • Das, Satya P, 2001. "Optimal Pollution Standard in an Open Economy: Characterizing Environmental Diversity," Review of International Economics, Wiley Blackwell, vol. 9(3), pages 429-442, August.
  • Handle: RePEc:bla:reviec:v:9:y:2001:i:3:p:429-42

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    Cited by:

    1. Meeta Mehra & Satya Das, 2008. "North–South Trade and Pollution Migration: The Debate Revisited," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(1), pages 139-164, May.

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