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Global Pollution: A Heckscher-Ohlin-Samuelson Model of Pigouvian Taxation

  • Robert E. Kohn

    (Southern Illinois University)

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    It could be inferred from the externality literature that, in the absence of lump sum transfers between countries, global Pigouvian taxation would make pollution-intensive countries worse-off. This paper uses the "strong version" of the Heckscher-Ohlin-Samuelson model to demonstrate that a uniform Pigouvian tax shifts the terms-of-trade in favor of the polluting good so that on balance a more polluting country could be better-off and a less polluting country worse-off. This result is consistent with some empirical observations on environmental policy in industrialized countries as compared with that in newly developing countries.

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    File URL: http://college.holycross.edu/RePEc/eej/Archive/Volume17/V17N3P337_343.pdf
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    Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

    Volume (Year): 17 (1991)
    Issue (Month): 3 (Jul-Sep)
    Pages: 337-343

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    Handle: RePEc:eej:eeconj:v:17:y:1991:i:3:p:337-343
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    1. Kosobud, Richard F & Daly, Thomas A, 1984. "Global Conflict or Cooperation over the CO2 Climate Impact?," Kyklos, Wiley Blackwell, vol. 37(4), pages 638-59.
    2. Pethig, Rudiger, 1976. "Pollution, welfare, and environmental policy in the theory of Comparative Advantage," Journal of Environmental Economics and Management, Elsevier, vol. 2(3), pages 160-169, February.
    3. Asako, Kazumi, 1979. "Environmental Pollution in an Open Economy," The Economic Record, The Economic Society of Australia, vol. 55(151), pages 359-67, December.
    4. Hahn, Robert W, 1989. "Economic Prescriptions for Environmental Problems: How the Patient Followed the Doctor's Orders," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 95-114, Spring.
    5. McGuire, Martin C., 1982. "Regulation, factor rewards, and international trade," Journal of Public Economics, Elsevier, vol. 17(3), pages 335-354, April.
    6. Merrifield, John D., 1988. "The impact of selected abatement strategies on transnational pollution, the terms of trade, and factor rewards: A general equilibrium approach," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 259-284, September.
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