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Trade and Pollution Linkages: Piecemeal Reform and Optimal Intervention

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  • John Beghin
  • David Roland-Holst
  • Dominique van der Mensbrugghe

Abstract

The authors demonstrate how coordinated trade and environmental policy can achieve efficiency and pollution mitigation gains superior to those obtained without such coordination. They show how trade and environment linkages give rise to complex second-best policy issues and derive optimal interventions and sufficient conditions for welfare-improving piecemeal trade and environmental policy reforms in a small economy. Changing trade and environment distortions in proportion to their optimal levels increases welfare. The authors decompose the economic and environment effects of policies targeted at trade and pollution in both consumption and production. They also decompose production responses into output adjustments and changes in pollution intensities.

Suggested Citation

  • John Beghin & David Roland-Holst & Dominique van der Mensbrugghe, 1997. "Trade and Pollution Linkages: Piecemeal Reform and Optimal Intervention," Canadian Journal of Economics, Canadian Economics Association, vol. 30(2), pages 442-455, May.
  • Handle: RePEc:cje:issued:v:30:y:1997:i:2:p:442-55
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