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The multiplier effect of globalization

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

Abstract

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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Suggested Citation

  • Damania, Richard & Fredriksson, Per G. & List, John A., 2004. "The multiplier effect of globalization," Economics Letters, Elsevier, vol. 83(3), pages 285-292, June.
  • Handle: RePEc:eee:ecolet:v:83:y:2004:i:3:p:285-292
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    1. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
    2. Barbara J. Spencer & James A. Brander, 1982. "Tariff Protection and Imperfect Competition," Working Papers 517, Queen's University, Department of Economics.
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    6. Stephen Morris & Stephen Coate, 1999. "Policy Persistence," American Economic Review, American Economic Association, vol. 89(5), pages 1327-1336, December.
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    8. Damania, Richard & Fredriksson, Per G. & List, John A., 2003. "Trade liberalization, corruption, and environmental policy formation: theory and evidence," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 490-512, November.
    9. 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.
    10. 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.
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    12. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
    13. 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.
    14. 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.
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    Cited by:

    1. Katrin Millock & Natalia Zugravu & GĂ©rard Duchene, 2008. "The Factors Behind CO2 Emission Reduction in Transition Economies," Working Papers 2008.58, Fondazione Eni Enrico Mattei.
    2. Bernard, Sophie & Hotte, Louis & Winer, Stanley L., 2014. "Democracy, inequality and the environment when citizens can mitigate health consequences of pollution privately or act collectively," European Journal of Political Economy, Elsevier, vol. 34(C), pages 142-156.
    3. Graham Mallard, 2014. "Static Common Agency And Political Influence: An Evaluative Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 28(1), pages 17-35, February.

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