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Environmental Policy in Open Economies and Monopolistic Competition

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  • Alexander Haupt

Abstract

This paper analyses the implications of international trade for non-cooperative environmental policy in the case of local production externalities. A particular focus is on the potential effects of regulations on the variety of goods and the resulting international spillover caused by trade. A tougher domestic standard negatively affects the utility of the households abroad, since such a policy reduces their variety of imports (due to fewer domestic product inventions) or their consumption of each imported brand (due to higher import prices). Ignoring the negative spillover, non-cooperative governments implement inefficiently strict standards in equilibrium. In contrast to this clear-cut inefficiency result, the impact of international trade on the state of the environment is ambiguous. Copyright Springer 2006

Suggested Citation

  • Alexander Haupt, 2006. "Environmental Policy in Open Economies and Monopolistic Competition," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(2), pages 143-167, February.
    • Handle: RePEc:kap:enreec:v:33:y:2006:i:2:p:143-167
    DOI: 10.1007/s10640-005-2645-x
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    References listed on IDEAS

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    Cited by:

    1. Andrea Podhorsky, 2020. "Environmental certification programs: How does information provision compare with taxation?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(6), pages 1772-1800, December.
    2. Nuno Carlos Leitão, 2021. "Testing the Role of Trade on Carbon Dioxide Emissions in Portugal," Economies, MDPI, vol. 9(1), pages 1-15, February.
    3. Harvey E. Lapan & Shiva Sikdar, 2017. "Can Trade Be Good for the Environment?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(2), pages 267-288, April.
    4. Roy, Jayjit, 2017. "On the environmental consequences of intra-industry trade," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 50-67.
    5. Gori, Giuseppe Francesco & Lambertini, Luca, 2013. "Trade liberalisation between asymmetric countries with environmentally concerned consumers," Regional Science and Urban Economics, Elsevier, vol. 43(4), pages 549-560.
    6. Annicchiarico, Barbara & Diluiso, Francesca, 2019. "International transmission of the business cycle and environmental policy," Resource and Energy Economics, Elsevier, vol. 58(C).
    7. Udo Kreickemeier & Philipp M. Richter, 2014. "Trade and the Environment: The Role of Firm Heterogeneity," Review of International Economics, Wiley Blackwell, vol. 22(2), pages 209-225, May.
    8. Yu-Bong Lai, 2023. "Capital mobility and environmental policy: taxes versus TEP," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(2), pages 326-350, April.
    9. Harvey E. Lapan & Shiva Sikdar, 2019. "Is Trade in Permits Good for the Environment?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(2), pages 501-510, February.
    10. Levy, Ting & Dinopoulos, Elias, 2016. "Global environmental standards with heterogeneous polluters," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 482-498.
    11. Michael Benarroch & James Gaisford, 2014. "Intra-industry Trade Liberalization and the Environment," Review of International Economics, Wiley Blackwell, vol. 22(5), pages 886-904, November.
    12. Nuno Carlos Leitão & Jeremiás Máté Balogh, 2020. "The impact of intra-industry trade on carbon dioxide emissions: The case of the European Union," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 66(5), pages 203-214.
    13. Bogmans, C.W.J., 2011. "Can globalization outweigh free-riding?," Serie Research Memoranda 0048, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.

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    More about this item

    Keywords

    environmental policy; international trade; monopolistic competition; open economies; process standards; Q28; F13; F12;
    All these keywords.

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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