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Environmental Regulation and International Trade


  • Sartzetakis, Eftichios Sophocles
  • Constantatos, Christos


In this paper, we investigate how a country's choice of environmental policy instrument affects the international competitiveness of its firms. We show that in a Cournot-Nash equilibrium, the total market share of firms regulated through tradeable emission permits increases relative to that of the firms operating under command and control due to better allocation of total abatement among the firms in the country. Our work suggests that free trade situations should not only result in similar environmental standards but also in similar regulatory regimes. It may come as no surprise that the environmental authorities in Canada are seriously considering following the United States in instituting a tradeable emission permits mechanism. Copyright 1995 by Kluwer Academic Publishers

Suggested Citation

  • Sartzetakis, Eftichios Sophocles & Constantatos, Christos, 1995. "Environmental Regulation and International Trade," Journal of Regulatory Economics, Springer, vol. 8(1), pages 61-72, July.
  • Handle: RePEc:kap:regeco:v:8:y:1995:i:1:p:61-72

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    Cited by:

    1. Christos Constantatos & Eleftherios Filippiadis & Eftichios Sartzetakis, 2014. "Using the allocation of emission permits for strategic trade purposes," Journal of Regulatory Economics, Springer, vol. 45(3), pages 259-280, June.
    2. Zaman, Rubaiya, 2012. "CO2 Emissions, Trade Openness and GDP Percapita : Bangladesh Perspective," MPRA Paper 48515, University Library of Munich, Germany.
    3. Feenstra, T.L., 1998. "Environmental policy instruments and international rivalry : A dynamic analysis," Other publications TiSEM 8d87c905-8af6-45a9-8305-5, Tilburg University, School of Economics and Management.
    4. repec:ebl:ecbull:v:17:y:2005:i:6:p:1-10 is not listed on IDEAS
    5. Florent Pratlong, 2005. "Environmental regulation incidences towards international oligopolies: pollution taxes vs emission permits," Economics Bulletin, AccessEcon, vol. 17(6), pages 1-10.
    6. Xing, Yuqing & Kolstad, Charles, 1996. "Environment and Trade: A Review of Theory and Issues," MPRA Paper 27694, University Library of Munich, Germany.

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