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The multiplier effect of globalization

  • Damania, Richard
  • Fredriksson, Per G.
  • List, John A.

This study uses a three-stage common agency model to explore the linkages between trade policy, corruption and environmental policy in an imperfect market setting. We show that the effect of trade liberalization on the stringency of environmental policy depends critically on the level of corruption-in relatively corrupt countries, trade openness leads to more stringent environmental policy. In such countries, this interaction, therefore, lends trade liberalization a type of "multiplier effect," raising both economic growth and environmental policy stringency.

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File URL: http://www.sciencedirect.com/science/article/pii/S0165-1765(03)00382-3
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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 83 (2004)
Issue (Month): 3 (June)
Pages: 285-292

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Handle: RePEc:eee:ecolet:v:83:y:2004:i:3:p:285-292
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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  1. Aidt, Toke S., 1998. "Political internalization of economic externalities and environmental policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 1-16, July.
  2. Stephen Coate & Stephen Morris, . "Policy Persistence," Penn CARESS Working Papers 8a66677895e9fcb3f6d813c0c, Penn Economics Department.
  3. B. Douglas Bernheim & Michael D. Whinston, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 101(1), pages 1-31.
  4. John List & Per Fredriksson & Richard Damania, 2003. "Trade liberalization, corruption, and environmental policy formation: theory and evidence," Natural Field Experiments 00503, The Field Experiments Website.
  5. Fredriksson, Per G. & Svensson, Jakob, 2003. "Political instability, corruption and policy formation: the case of environmental policy," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1383-1405, August.
  6. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
  7. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
  8. Barbara J. Spencer & James A. Brander, 1982. "Tariff Protection and Imperfect Competition," Working Papers 517, Queen's University, Department of Economics.
  9. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
  10. Josh Ederington, 2001. "International Coordination of Trade and Domestic Policies," American Economic Review, American Economic Association, vol. 91(5), pages 1580-1593, December.
  11. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
  12. Alberto F. Ades & Edward L. Glaeser, 1999. "Evidence on Growth, Increasing Returns, and the Extent of the Market," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 1025-1045.
  13. Damania, R., 2001. "When the Weak Win: The Role of Investment in Environmental Lobbying," Journal of Environmental Economics and Management, Elsevier, vol. 42(1), pages 1-22, July.
  14. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
  15. Lopez, Ramon & Mitra, Siddhartha, 2000. "Corruption, Pollution, and the Kuznets Environment Curve," Journal of Environmental Economics and Management, Elsevier, vol. 40(2), pages 137-150, September.
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