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Multilateral trade and environmental reforms in a polluted open economy

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  • Alberto Gallegos David

    (Universidad Anáhuac México Norte)

Abstract

This paper presents welfare-improving reforms for a polluted open economy aiming to reduce distortions from the use of trade and pollution taxes applied at a sub-optimal level. Using a general equilibrium model where two final goods are produced using an intermediate pollutant input and traded with a foreign country, the domestic economy chooses trade and environmental policies optimally. Terms of trade effects are key to finding that free trade and non-zero pollution taxes are the directions for multilateral welfare-improving reforms.

Suggested Citation

  • Alberto Gallegos David, 2017. "Multilateral trade and environmental reforms in a polluted open economy," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 32(2), pages 293-315.
    • Handle: RePEc:emx:esteco:v:32:y:2017:i:2:p:293-315
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    References listed on IDEAS

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    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment

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