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International trade in recycled materials in vertically related markets

  • Hajime Sugeta

    ()

  • Takayoshi Shinkuma

This paper examines environmental effects of trade in recycled materials in a two-country model of international trade with a vertical structure. Downstream duopoly firms located in different countries can use recycled materials as an input to produce a recyclable final good. With heterogeneous recovery rates, the final good is recycled by upstream recycling duopoly firms located in each country. We first explore the conditions for the emergence of bilateral trade in the recycled materials and then examine the effects of liberalizing trade in the upstream as well as the downstream market on environmental damage. We show that, depending on the heterogeneity in the recovery rates between the two countries, trade liberalization in each vertically related market can be detrimental or beneficial to the environment. Copyright Springer 2012

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File URL: http://hdl.handle.net/10.1007/s10018-012-0036-4
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Article provided by Society for Environmental Economics and Policy Studies - SEEPS in its journal Environmental Economics and Policy Studies.

Volume (Year): 14 (2012)
Issue (Month): 4 (October)
Pages: 357-382

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Handle: RePEc:spr:envpol:v:14:y:2012:i:4:p:357-382
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  1. Joan Canton & Antoine Soubeyran & Hubert Stahn, 2008. "Environmental Taxation and Vertical Cournot Oligopolies: How Eco-industries Matter," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(3), pages 369-382, July.
  2. Copeland, Brian R., 1991. "International trade in waste products in the presence of illegal disposal," Journal of Environmental Economics and Management, Elsevier, vol. 20(2), pages 143-162, March.
  3. James Cassing & Thomas Kuhn, 2003. "Strategic Environmental Policies when Waste Products are Tradable," Review of International Economics, Wiley Blackwell, vol. 11(3), pages 495-511, 08.
  4. Jota Ishikawa & Barbara J. Spencer, 1996. "Rent-Shifting Export Subsidies with an Imported Intermediate Product," NBER Working Papers 5458, National Bureau of Economic Research, Inc.
  5. Stephan F. Hamilton & Till Requate, 2001. "Vertical Structure and Strategic Environmental Trade Policy," CESifo Working Paper Series 594, CESifo Group Munich.
  6. Eichner, Thomas & Pethig, Rudiger, 2001. "Product Design and Efficient Management of Recycling and Waste Treatment," Journal of Environmental Economics and Management, Elsevier, vol. 41(1), pages 109-134, January.
  7. Thomas Eichner, 2005. "Imperfect Competition In The Recycling Industry," Metroeconomica, Wiley Blackwell, vol. 56(1), pages 1-24, 02.
  8. Greaker, Mads & Rosendahl, Knut Einar, 2008. "Environmental policy with upstream pollution abatement technology firms," Journal of Environmental Economics and Management, Elsevier, vol. 56(3), pages 246-259, November.
  9. Takayoshi Shinkuma & Shunsuke Managi, 2012. "Effectiveness of policy against illegal disposal of waste," Environmental Economics and Policy Studies, Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(2), pages 123-145, April.
  10. Hajime Sugeta & Shigeru Matsumoto, 2007. "Upstream and downstream pollution taxations in vertically related markets with imperfect competition," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 38(3), pages 407-432, November.
  11. Grace, Richard & Turner, R. Kerry & Walter, Ingo, 1978. "Secondary materials and international trade," Journal of Environmental Economics and Management, Elsevier, vol. 5(2), pages 172-186, June.
  12. Higashida, Keisaku & Jinji, Naoto, 2005. "Strategic Use of Recycled Content Standards under International Duopoly," Discussion Papers 2004-12, Graduate School of Economics, Hitotsubashi University.
  13. Bernhofen, Daniel M., 1995. "Price dumping in intermediate good markets," Journal of International Economics, Elsevier, vol. 39(1-2), pages 159-173, August.
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