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Is trade liberalization conducive to the formation of climate coalitions?

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  • Thomas Eichner
  • Rüdiger Pethig

Abstract

The present paper analyzes the impact of moving from autarky to international trade on the formation of self-enforcing international environmental agreements with Nash coalitions. With and without trade, stable coalitions consist of two countries at most—in contrast to the model that portrays coalitions as Stackelberg leaders (Eichner and Pethig in Public Econ 102:37–50, 2013 ). Although the coalition steps up its mitigation effort in the transition from autarky to trade, world emissions rise and thus constitute a ‘green paradox of trade liberalization.’ Opening the borders not only increases global pollution, but also reduces the aggregate welfare of all countries. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Thomas Eichner & Rüdiger Pethig, 2015. "Is trade liberalization conducive to the formation of climate coalitions?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(6), pages 932-955, December.
  • Handle: RePEc:kap:itaxpf:v:22:y:2015:i:6:p:932-955
    DOI: 10.1007/s10797-014-9337-9
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    References listed on IDEAS

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    Cited by:

    1. Achim Hagen & Juan-Carlos Altamirano-Cabrera & Hans-Peter Weikard, 2021. "National political pressure groups and the stability of international environmental agreements," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 21(3), pages 405-425, September.
    2. Emilson C. D. Silva, 2017. "Self-enforcing agreements under unequal nationally determined contributions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(4), pages 705-729, August.
    3. Hideo Konishi & Minoru Nakada & Akihisa Shibata, 2018. "Free Trade Agreements with Environmental Standards," Boston College Working Papers in Economics 972, Boston College Department of Economics.
    4. Soham Baksi & Amrita Ray Chaudhuri, 2016. "International Trade and Environmental Cooperation among Heterogeneous Countries," Departmental Working Papers 2016-03, The University of Winnipeg, Department of Economics.
    5. Tibor Besedeš & Erik P. Johnson & Xinping Tian, 2020. "Economic determinants of multilateral environmental agreements," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(4), pages 832-864, August.

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    More about this item

    Keywords

    Sub-global climate coalition; International trade; Trade liberalization; Self-enforcing IEA; C72; F50; Q50; Q58;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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