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Trade, Transboundary Pollution, and Foreign Lobbying

Author

Listed:
  • Charles F. Mason

    () (University of Wyoming
    London School of Economics)

  • Victoria I. Umanskaya

    (Occidental College)

  • Edward B. Barbier

    (University of Wyoming)

Abstract

Abstract In this paper, we explore the use of trade policy in addressing transboundary stock pollution problems such as acid rain and water pollution. We show that a tariff determined by the current level of accumulated pollution can induce the time path of emissions optimal for the downstream (polluted) country. But if the upstream (polluting) country can lobby the downstream government to impose lower tariffs, distortions brought by corruption and foreign lobbying lead to a rise in the upstream country’s social welfare, and to a decrease in social welfare in the downstream country. Thus, the usefulness of trade policy as a tool for encouraging cooperation and internalizing transboundary externalities depends critically on the degree of governments’ susceptibility to foreign political influence.

Suggested Citation

  • Charles F. Mason & Victoria I. Umanskaya & Edward B. Barbier, 2018. "Trade, Transboundary Pollution, and Foreign Lobbying," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(1), pages 223-248, May.
  • Handle: RePEc:kap:enreec:v:70:y:2018:i:1:d:10.1007_s10640-017-0118-7
    DOI: 10.1007/s10640-017-0118-7
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Transboundary pollution; Differential game; Lobbying;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F59 - International Economics - - International Relations, National Security, and International Political Economy - - - Other
    • 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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