The Political Economy of Tariffs and Environmental Standards
This paper highlights the effects of the structures of games on interest groups' lobbying behavior. When policies are determined simultaneously, environmentalists prefer a higher tariff and a stricter environmental product standard, in order to hinder imports of a good that generate negative consumption-type externalities. In a sequential game, where the tariff is determined first, environmentalists will attempt to reduce the tariff. A reduction in the tariff tightens the environmental standard, which has a stronger trade-restrictive effect. To take advantage of the stronger trade-restrictive effect of environmental regulation, environmentalists will strategically lobby for a lower tariff barrier.
Volume (Year): 161 (2005)
Issue (Month): 3 (September)
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- Buchanan, James M & Tullock, Gordon, 1975. "Polluters' Profits and Political Response: Direct Controls Versus Taxes," American Economic Review, American Economic Association, vol. 65(1), pages 139-47, March.
- Aidt, Toke S., 1998. "Political internalization of economic externalities and environmental policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 1-16, July.
- Bommer, Rolf & Schulze, Gunther G., 1999. "Environmental improvement with trade liberalization," European Journal of Political Economy, Elsevier, vol. 15(4), pages 639-661, November.
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