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Can R&D-inducing green tariffs replace international environmental regulations?

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  • Naghavi, Alireza

Abstract

This paper investigates the link between trade and environment by exploring the effects of green tariffs on the location of firms, innovation and the environment. It shows that tariffs levied on polluting goods could result in less global pollution than harmonization of environmental standards by inducing more pollution abatement R&D, generating lower unit emissions from production, and reducing competition. Green tariffs reduce pollution by (1) shifting production to the region where environmental standards are respected, (2) strategically inducing abatement R&D by the Northern firm by granting the latter a higher market share, (3) creating abatement R&D by deterring delocation.
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Suggested Citation

  • Naghavi, Alireza, 2007. "Can R&D-inducing green tariffs replace international environmental regulations?," Resource and Energy Economics, Elsevier, vol. 29(4), pages 284-299, November.
  • Handle: RePEc:eee:resene:v:29:y:2007:i:4:p:284-299
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    1. Markusen James R. & Morey Edward R. & Olewiler Nancy D., 1993. "Environmental Policy when Market Structure and Plant Locations Are Endogenous," Journal of Environmental Economics and Management, Elsevier, vol. 24(1), pages 69-86, January.
    2. J. Neary, 2006. "International Trade and the Environment: Theoretical and Policy Linkages," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 95-118.
    3. Javorcik Beata Smarzynska & Wei Shang-Jin, 2003. "Pollution Havens and Foreign Direct Investment: Dirty Secret or Popular Myth?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(2), pages 1-34, December.
    4. Jean-Marie Grether & Jaime de Melo, 2003. "Globalization and Dirty Industries: Do Pollution Havens Matter?," NBER Working Papers 9776, National Bureau of Economic Research, Inc.
    5. Carraro, Carlo & Siniscaico, Domenico, 1994. "Environmental policy reconsidered: The role of technological innovation," European Economic Review, Elsevier, vol. 38(3-4), pages 545-554, April.
    6. Motta, Massimo & Thisse, Jacques-Francois, 1994. "Does environmental dumping lead to delocation?," European Economic Review, Elsevier, vol. 38(3-4), pages 563-576, April.
    7. Eskeland, Gunnar S. & Harrison, Ann E., 2003. "Moving to greener pastures? Multinationals and the pollution haven hypothesis," Journal of Development Economics, Elsevier, pages 1-23.
    8. Greaker, Mads, 2006. "Spillovers in the development of new pollution abatement technology: A new look at the Porter-hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 411-420, July.
    9. Ulph, A. & Ulph, D., 1994. "Trade, strategic innovation and strategic environmental policy: a general analysis," Discussion Paper Series In Economics And Econometrics 9416, Economics Division, School of Social Sciences, University of Southampton.
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    11. Ulph, Alistair Mitchell & Ulph, David, 1994. "Trade, Strategic Innovation and Strategic Environmental Policy - a General Analysis," CEPR Discussion Papers 1063, C.E.P.R. Discussion Papers.
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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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