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North-South Trade and the Environment

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  • Brian R. Copeland
  • M. Scott Taylor

Abstract

A simple static model of North-South trade is developed to examine linkages between national income, pollution, and international trade. Two countries produce a continuum of goods, each differing in pollution intensity. We show that the higher income country chooses stronger environmental protection, and specializes in relatively clean goods. By isolating the scale, composition, and technique effects of international trade on pollution, we show that free trade increases world pollution; an increase in the rich North's production possibilities increases pollution, while similar growth in the poor South lowers pollution; and unilateral transfers from North to South reduce worldwide pollution.

Suggested Citation

  • Brian R. Copeland & M. Scott Taylor, 1994. "North-South Trade and the Environment," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 755-787.
  • Handle: RePEc:oup:qjecon:v:109:y:1994:i:3:p:755-787.
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    File URL: http://hdl.handle.net/10.2307/2118421
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    References listed on IDEAS

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    1. Dean, Judith M., 1992. "Trade and the environment : a survey of the literature," Policy Research Working Paper Series 966, The World Bank.
    2. Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
    3. McGuire, Martin C., 1982. "Regulation, factor rewards, and international trade," Journal of Public Economics, Elsevier, vol. 17(3), pages 335-354, April.
    4. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, October.
    5. Staiger, Robert W, 1988. "Organized Labor and the Scope of International Specialization," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 1022-1047, October.
    6. Markusen, James R., 1975. "International externalities and optimal tax structures," Journal of International Economics, Elsevier, vol. 5(1), pages 15-29, February.
    7. Copeland Brian R., 1994. "International Trade and the Environment: Policy Reform in a Polluted Small Open Economy," Journal of Environmental Economics and Management, Elsevier, vol. 26(1), pages 44-65, January.
    8. Pethig, Rudiger, 1976. "Pollution, welfare, and environmental policy in the theory of Comparative Advantage," Journal of Environmental Economics and Management, Elsevier, vol. 2(3), pages 160-169, February.
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