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Environmental standards as strategic outcomes: A simple model

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  • Bhattacharya, Rabindra N.
  • Pal, Rupayan

Abstract

This paper analyses the strategic nature of choice of environmental standards considering both local and global pollution under alternative regimes of international trade. It also compares and contrasts the strategic equilibrium environmental standards and levels of pollution, local and global, with the world optimum levels. It shows that, in case of open economies, environmental standards can be either strategic substitutes or strategic complements. On the contrary, in case of closed economies, environmental standards are always strategic substitutes. It also shows that the strategic equilibrium environmental standards in case of open economies are higher than the world optimum in certain situations. Whereas, in absence of international trade, countries set, in equilibrium, lower environmental standards than the world optimum.

Suggested Citation

  • Bhattacharya, Rabindra N. & Pal, Rupayan, 2010. "Environmental standards as strategic outcomes: A simple model," Resource and Energy Economics, Elsevier, vol. 32(3), pages 408-420, August.
  • Handle: RePEc:eee:resene:v:32:y:2010:i:3:p:408-420
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    1. Chichilnisky, Graciela, 1994. "North-South Trade and the Global Environment," American Economic Review, American Economic Association, vol. 84(4), pages 851-874, September.
    2. 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.
    3. Shuichi Ohori, 2006. "Optimal Environmental Tax and Level of Privatization in an International Duopoly," Journal of Regulatory Economics, Springer, vol. 29(2), pages 225-233, March.
    4. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-737, September.
    5. Silva, Emilson C.D. & Zhu, Xie, 2009. "Emissions trading of global and local pollutants, pollution havens and free riding," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 169-182, September.
    6. Brian R. Copeland & M. Scott Taylor, 1994. "North-South Trade and the Environment," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 755-787.
    7. Burguet, Roberto & Sempere, Jaume, 2003. "Trade liberalization, environmental policy, and welfare," Journal of Environmental Economics and Management, Elsevier, vol. 46(1), pages 25-37, July.
    8. Kennedy Peter W., 1994. "Equilibrium Pollution Taxes in Open Economies with Imperfect Competition," Journal of Environmental Economics and Management, Elsevier, vol. 27(1), pages 49-63, July.
    9. Ulph, Alistair, 1996. "Environmental Policy and International Trade when Governments and Producers Act Strategically," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 265-281, May.
    10. Odd Rune Straume, 2006. "Product Market Integration and Environmental Policy Coordination in An International Duopoly," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(4), pages 535-563, August.
    11. Conrad Klaus, 1993. "Taxes and Subsidies for Pollution-Intensive Industries as Trade Policy," Journal of Environmental Economics and Management, Elsevier, vol. 25(2), pages 121-135, September.
    12. Yann Duval & Stephen Hamilton, 2002. "Strategic Environmental Policy and International Trade in Asymmetric Oligopoly Markets," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(3), pages 259-271, May.
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    Cited by:

    1. Rupayan Pal, 2012. "Delegation And Emission Tax In A Differentiated Oligopoly," Manchester School, University of Manchester, vol. 80(6), pages 650-670, December.
    2. Rupayan Pal & Bibhas Saha, 2011. "Environmental outcomes in a model of mixed duopoly," University of East Anglia Applied and Financial Economics Working Paper Series 030, School of Economics, University of East Anglia, Norwich, UK..
    3. Rupayan Pal & Bibhas Saha, 2010. "Does partial privatization improve the environment," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2010-018, Indira Gandhi Institute of Development Research, Mumbai, India.
    4. Pal, Rupayan & Saha, Bibhas, 2015. "Pollution tax, partial privatization and environment," Resource and Energy Economics, Elsevier, vol. 40(C), pages 19-35.
    5. repec:kap:jeczfn:v:122:y:2017:i:3:d:10.1007_s00712-017-0541-9 is not listed on IDEAS

    More about this item

    Keywords

    Environmental standards Local pollution Global pollution Strategic choice World optimum;

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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