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International treaties on trade and global pollution

  • Chander, Parkash
  • Khan, M. Ali

The paper shows that global pollution need not rise under free trade in goods and/or emissions even in the complete absence of income effects. Differences in environmental concerns across the countries lead to differences in the pollutionintensity of production and thus generate the possibility of increasing world output and income without increasing the world pollution by shifting the production of the polluting good from the country with higher pollution-intensity of production to the country with lower one. We show that free trade in goods and/or emissions can induce precisely such a shifting of production with the country with greater environmental concern exporting the polluting good. The paper also demonstrates the possibility of a first-best international treaty on global pollution in which each country or group of countries is better-off.

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Article provided by Elsevier in its journal International Review of Economics & Finance.

Volume (Year): 10 (2001)
Issue (Month): 4 (December)
Pages: 303-324

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Handle: RePEc:eee:reveco:v:10:y:2001:i:4:p:303-324
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620165

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  1. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-37, September.
  2. Chander, P. & Tulkens, H., . "A core-theoretic solution for the design of cooperative agreements on transfrontier pollution," CORE Discussion Papers RP -1158, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Gene M. Grossman & Elhanan Helpman, 1993. "The Politics of Free Trade Agreements," NBER Working Papers 4597, National Bureau of Economic Research, Inc.
  4. CHANDER, Parkash & TULKENS, Henry, . "Theoretical foundations of negotiations and cost sharing in transfrontier pollution problems," CORE Discussion Papers RP -983, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
  6. Richelle, Y., 1996. "Trade Incidence on Transboundary Pollution: Free Trade Can Benefit the Global Environmental Quality," Papers 9616, Laval - Recherche en Politique Economique.
  7. Chander, Parkash & Tulkens, Henry, 1994. "The Core of an Economy With Multilateral Environmental Externalities," Working Papers 886, California Institute of Technology, Division of the Humanities and Social Sciences.
  8. Brian R. Copeland & M. Scott Taylor, 1997. "A Simple Model of Trade, Capital Mobility, and the Environment," NBER Working Papers 5898, National Bureau of Economic Research, Inc.
  9. Richelle, Yves, 1996. "Trade Incidence on Transboundary Pollution: Free Trade Can Benefit the Global Environmental Quality," Cahiers de recherche 9616, Université Laval - Département d'économique.
  10. Beladi, Hamid & Chau, Nancy H. & Ali Khan, M., 2000. "North-South Investment Flows and Optimal Environmental Policies," Journal of Environmental Economics and Management, Elsevier, vol. 40(3), pages 275-296, November.
  11. Markusen, James R, 1975. "Cooperative Control of International Pollution and Common Property Resources," The Quarterly Journal of Economics, MIT Press, vol. 89(4), pages 618-32, November.
  12. Rauscher, Michael, 1991. "National environmental policies and the effects of economic integration," European Journal of Political Economy, Elsevier, vol. 7(3), pages 313-329, October.
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