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Regional versus Multilateral Trade Liberalization, Environmental Taxation, and Welfare

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  • Soham Baksi

Abstract

The paper considers trade between identical countries with imperfectly competitive markets, and compares the impacts of regional and multilateral tariff reduction on strategic environmental taxation and welfare. While both forms of trade liberalization increase production and consumption in tariffreducing countries, regionalism also reduces production in a nonparticipating country and may decrease its consumption. Consequently, regionalism and multilateralism change pollution tax and welfare in the tariffreducing countries in similar ways when pollution is local, but in dissimilar ways for global pollution. When pollution is global, regionalism is likely to be preferred to multilateralism for the establishment of free trade among countries.

Suggested Citation

  • Soham Baksi, 2014. "Regional versus Multilateral Trade Liberalization, Environmental Taxation, and Welfare," Canadian Journal of Economics, Canadian Economics Association, vol. 47(1), pages 232-249, February.
  • Handle: RePEc:cje:issued:v:47:y:2014:i:1:p:232-249
    DOI: 10.1111/caje.12072
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    Cited by:

    1. Fabio Antoniou & Efthymia Kyriakopoulou, 2019. "On the Strategic Effect of International Permits Trading on Local Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 1299-1329, November.
    2. Thierry Madiès & Ornella Tarola & Emmanuelle Taugourdeau, 2021. "Tax haven, pollution haven or both?," Working Papers 2021-02, Center for Research in Economics and Statistics.
    3. Soham Baksi & Amrita Ray Chaudhuri, 2020. "Imperfect Competition, Border Carbon Adjustments, and Stability of a Global Climate Agreement," Departmental Working Papers 2020-03, The University of Winnipeg, Department of Economics.
    4. Hinnerk Gnutzmann & Arevik Gnutzmann‐Mkrtchyan, 2019. "The silent success of customs unions," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(1), pages 178-224, February.
    5. Hinnerk Gnutzmann & Arevik Gnutzmann-Mkrtchyan, 2019. "The silent success of customs unions," Canadian Journal of Economics, Canadian Economics Association, vol. 52(1), pages 178-224, February.
    6. Hinnerk Gnutzmann & Arevik Gnutzmann-Mkrtchyan, 2019. "The silent success of customs unions," Canadian Journal of Economics, Canadian Economics Association, vol. 52(1), pages 178-224, February.
    7. Weng, Yungho & Hsu, Kuang-Chung & Liu, Bih Jane, 2019. "Increasing worldwide environmental consciousness and environmental policy adjustment," The Quarterly Review of Economics and Finance, Elsevier, vol. 71(C), pages 205-210.
    8. Zhang, Jingjing, 2020. "International production fragmentation, trade in intermediate goods and environment," Economic Modelling, Elsevier, vol. 87(C), pages 1-7.

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    More about this item

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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