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National Treatment and the optimal regulation of environmental externalities

Author

Listed:
  • Sumeet Gulati
  • Devesh Roy

Abstract

We analyze the role of National Treatment in the regulation of environmental product standards for an open economy. A social planner uses product standards to control emissions from the consumption of a traded good. We show that whether National Treatment of standards interferes with welfare-maximizing policy depends on the instruments available to the policy maker (consumption or emissions tax) and differences in the cost of complying with the standard. We also highlight the asymmetric incidence of the domestic and import product standard when taxes are suboptimal. This asymmetric incidence can also cause welfare-maximizing policy to violate National Treatment.

Suggested Citation

  • Sumeet Gulati & Devesh Roy, 2008. "National Treatment and the optimal regulation of environmental externalities," Canadian Journal of Economics, Canadian Economics Association, vol. 41(4), pages 1445-1471, November.
  • Handle: RePEc:cje:issued:v:41:y:2008:i:4:p:1445-1471
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    Citations

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    Cited by:

    1. Fabio Antoniou & Panos Hatzipanayotou & Michael S. Michael & Nikos Tsakiris, 2016. "On the Efficiency of Destination and Origin Commodity Taxation in the Presence of Consumption Generated Cross-Border Pollution," CESifo Working Paper Series 6221, CESifo Group Munich.
    2. Doi, Naoshi & Ohashi, Hiroshi, 2017. "Empirical analysis of the national treatment obligation under the WTO: The case of Japanese shochu," Journal of the Japanese and International Economies, Elsevier, vol. 46(C), pages 43-52.
    3. Horn, Henrik, 2009. "The Burden of Proof in National Treatment Disputes and the Environment," Working Paper Series 791, Research Institute of Industrial Economics.
    4. Horn, Henrik, 2011. "The burden of proof in trade disputes and the environment," Journal of Environmental Economics and Management, Elsevier, vol. 62(1), pages 15-29, July.
    5. Robert W. Staiger & Alan O. Sykes, 2011. "International Trade, National Treatment, and Domestic Regulation," The Journal of Legal Studies, University of Chicago Press, vol. 40(1), pages 149-203.
    6. Staiger, Robert W., 2012. "Non-tariff measures and the WTO," WTO Staff Working Papers ERSD-2012-01, World Trade Organization (WTO), Economic Research and Statistics Division.
    7. repec:eee:worbus:v:53:y:2018:i:2:p:164-176 is not listed on IDEAS
    8. Beverelli, Cosimo & Boffa, Mauro & Keck, Alexander, 2014. "Trade policy substitution: Theory and evidence from Specific Trade Concerns," WTO Staff Working Papers ERSD-2014-18, World Trade Organization (WTO), Economic Research and Statistics Division.
    9. Paul Missios & Ida Ferrara & Halis Murat Yildiz, 2015. "Consumption Externalities, Product Quality, and the Role of National Treatment," Working Papers 048, Ryerson University, Department of Economics.
    10. Robert W. Staiger & Alan O. Sykes, 2009. "International Trade and Domestic Regulation," NBER Working Papers 15541, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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