Export Processing Zones and Environmental Policy
In this paper, we consider the impact of establishing export processing zones on environmental policy. The model assumes that aggregate pollution is regulated by a quota so as to maximize domestic welfare, and the pollution target is implemented with a marketable permit system. We show that the emission quota may be strengthened with the formation of the zone even if firms located in the export processing zone have cleaner technology than those in the domestic zone.
Volume (Year): 6 (2007)
Issue (Month): 20 ()
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