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Welfare and Trade Effects of International Environmental Agreements

Author

Listed:
  • Catia Montagna

    (University of Aberdeen)

  • Avanti Nisha Pinto

    (University of Brighton)

  • Nikolaos Vlassis

    (University of Aberdeen)

Abstract

We analyse the welfare effects of environmental policy arising from the formation of an international environmental agreement on the participating and non-participating countries and thus shed light on the potential incentives for a country to join such an agreement. Within a N-country Q-goods general equilibrium framework under free-trade conditions, we consider unilateral and cooperative policy settings and, within the latter, country-specific and fully harmonized policies within the agreement. A key result of the paper is the emergence of a negative relationship, arising from terms of trade effects, between the welfare changes of the participating and non-participating countries following the formation of the agreement. These however do not result in a zero sum welfare outcome for the world as a whole.

Suggested Citation

  • Catia Montagna & Avanti Nisha Pinto & Nikolaos Vlassis, 2020. "Welfare and Trade Effects of International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(2), pages 331-345, July.
  • Handle: RePEc:kap:enreec:v:76:y:2020:i:2:d:10.1007_s10640-020-00428-x
    DOI: 10.1007/s10640-020-00428-x
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    References listed on IDEAS

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    More about this item

    Keywords

    International environmental agreements; Environmental taxation; International trade; Pareto efficiency; Pareto improving reforms; Climate change;
    All these keywords.

    JEL classification:

    • 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
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • F18 - International Economics - - Trade - - - Trade and Environment

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