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Environment, trade and the welfare gains from the transfer of pollution abatement technology**We are indebted to Professors Murray C. Kemp, Minoru Kunizaki, Makoto Okamura, Jacques Poot, Tomoko Inoue, and the referees for valuable comments and suggestions. The second author gratefully acknowledges the Zengin Foundation for Studies on Economics and Finance and Nihon Gakujutsushinkokai Aid for Scientific Research (Basic Research A(1) No. 11353001) for financial support

Author

Listed:
  • Itoh, Azusa
  • Tawada, Makoto

Abstract

We analyse in this article the welfare effect of trade and environmental technology transfer from a developed country to a developing country. We use a two country, two sector and two factor Ricardian general equilibrium model. The two industries are manufacturing and agriculture, and the pollution emitted from the manufacturing industry decreases the natural environment useful to agricultural production. We consider two cases. In the first case pollution in each country is local. In filethe second case pollution in one of the two countries is global. We analyse each case separately and obtain the following results. In the first case the developed country may be worse off it technology is transferred to the developing country. In the second case such a paradox never occurs.

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Handle: RePEc:eee:paresc:v:82:y:2003:i:4:p:519-534
DOI: 10.1007/s10110-003-0165-z
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JEL classification:

  • D62 - Microeconomics - - Welfare Economics - - - Externalities
  • F18 - International Economics - - Trade - - - Trade and Environment
  • O39 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Other

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