IDEAS home Printed from https://ideas.repec.org/a/spr/jecrev/v75y2024i1d10.1007_s42973-021-00109-4.html
   My bibliography  Save this article

Tourism infrastructure and the environment: how does environmental regulation affect welfare, tourism industry, and domestic wage inequality?

Author

Listed:
  • Takanori Shimizu

    (University of Hyogo)

  • Hisayuki Okamoto

    (Sonoda Women’s University)

Abstract

This study presents a general equilibrium model of a small open developing economy with pollution generated by the tourism industry. The national government issues emission permits and constructs tourism infrastructure for the tourism sector. We examine the effects of a stricter environmental regulation on welfare, production, and income distribution. If the elasticity of substitution in the tourism sector is sufficiently low, a stricter environmental regulation paradoxically expands the tourism sector and narrows domestic wage inequality, even under constant tourism terms of trade. In this model, in addition to the two traditional channels, there is a new channel through which a stricter environmental regulation affects the tourism terms of trade and domestic welfare. The new channel, which arises from the difference between the marginal value product of tourism infrastructure and its price, improves the tourism terms of trade and domestic welfare if (1) the marginal value product of tourism infrastructure is greater than its price, (2) the output of tourism infrastructure is increased by a stricter environmental regulation, and (3) the excess supply of a tourism service decreases with a stricter environmental regulation.

Suggested Citation

  • Takanori Shimizu & Hisayuki Okamoto, 2024. "Tourism infrastructure and the environment: how does environmental regulation affect welfare, tourism industry, and domestic wage inequality?," The Japanese Economic Review, Springer, vol. 75(1), pages 147-179, January.
    • Handle: RePEc:spr:jecrev:v:75:y:2024:i:1:d:10.1007_s42973-021-00109-4
    DOI: 10.1007/s42973-021-00109-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s42973-021-00109-4
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s42973-021-00109-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Chi‐Chur Chao & Jean‐Pierre Laffargue & Pasquale M. Sgro, 2010. "Foreign Aid, Wage Inequality, and Welfare for a Small Open Economy with Tourism," Review of International Economics, Wiley Blackwell, vol. 18(3), pages 454-464, August.
    2. Chi-Chur Chao & Bharat R. Hazari & Jean-Pierre Laffargue & Eden S.H. Yu, 2008. "Chapter 16 Environmental Regulations for a Small Open Economy with Tourism," Frontiers of Economics and Globalization, in: Globalization and Emerging Issues in Trade Theory and Policy, pages 269-284, Emerald Group Publishing Limited.
    3. Beladi, Hamid & Chao, Chi-Chur & Hazari, Bharat R. & Laffargue, Jean-Pierre, 2009. "Tourism and the environment," Resource and Energy Economics, Elsevier, vol. 31(1), pages 39-49, January.
    4. Jean-Pierre Laffargue & Chi-Chur Chao & Bharat R. Hazari & Eden S. H. Yu, 2008. "Environmental regulations for a small open economy with tourism," Post-Print halshs-00645327, HAL.
    5. Oladi, Reza & Beladi, Hamid, 2015. "On foreign aid, pollution and abatement," Environment and Development Economics, Cambridge University Press, vol. 20(6), pages 797-812, December.
    6. Chao Chi-Chur & Pasquale M Sgro & Jean-Pierre Laffargue, 2012. "Environmental Control, Wage Inequality and National Welfare for a Tourism Economy," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00644023, HAL.
    7. John Beghin & David Roland-Holst & Dominique van der Mensbrugghe, 1997. "Trade and Pollution Linkages: Piecemeal Reform and Optimal Intervention," Canadian Journal of Economics, Canadian Economics Association, vol. 30(2), pages 442-455, May.
    8. Jota Ishikawa & Kazuharu Kiyono, 2006. "Greenhouse-Gas Emission Controls In An Open Economy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(2), pages 431-450, May.
    9. Chao, Chi-Chur & Laffargue, Jean-Pierre & Sgro, Pasquale M., 2012. "Environmental control, wage inequality and national welfare in a tourism economy," International Review of Economics & Finance, Elsevier, vol. 22(1), pages 201-207.
    10. Shigemi Yabuuchi, 2013. "Tourism, the environment, and welfare in a dual economy," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 20(2), pages 172-182, June.
    11. Akihiko Yanase, 2015. "Investment in Infrastructure and Effects of Tourism Boom," Review of International Economics, Wiley Blackwell, vol. 23(2), pages 425-443, May.
    12. Beladi, Hamid & Liu, Lu & Oladi, Reza, 2013. "On pollution permits and abatement," Economics Letters, Elsevier, vol. 119(3), pages 302-305.
    13. Akihiko Yanase, 2017. "Policy Reform and Optimal Policy Mix in a Polluted Small Open Economy with Tourism," Review of International Economics, Wiley Blackwell, vol. 25(3), pages 607-625, August.
    14. Manash Ranjan Gupta & Priya Brata Dutta, 2018. "Tourism development, environmental pollution and economic growth: A theoretical analysis," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(2), pages 125-144, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pengqing Zhang, 2024. "Pollution control, worker productivity, and wage inequality," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 72(4), pages 1105-1128, April.
    2. Akihiko Yanase, 2017. "Policy Reform and Optimal Policy Mix in a Polluted Small Open Economy with Tourism," Review of International Economics, Wiley Blackwell, vol. 25(3), pages 607-625, August.
    3. Guoqun Ma & Danyang Lv & Yuxi Luo & Tuanbiao Jiang, 2022. "Environmental Regulation, Urban-Rural Income Gap and Agricultural Green Total Factor Productivity," Sustainability, MDPI, vol. 14(15), pages 1-22, July.
    4. Jiyu Zhao & Ning Zhang, 2023. "Environmental regulation and labor market: a bibliometric analysis," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 6095-6116, July.
    5. Petit, Sylvain, 2016. "International trade in services and inequalities: Empirical evaluation and role of tourism services," MPRA Paper 75206, University Library of Munich, Germany.
    6. Yuichi Furukawa & Kenji Kondoh & Shigemi Yabuuchi, 2019. "Tourism, Capital and Labor Inflows and Regional Development," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 25(2), pages 221-233, May.
    7. Qin, Ming & Fan, Lin-feng & Li, Jing & Li, Yi-fei, 2021. "The income distribution effects of environmental regulation in China: The case of binding SO2 reduction targets," Journal of Asian Economics, Elsevier, vol. 73(C).
    8. Pengqing Zhang, 2019. "Skill formation, environmental pollution, and wage inequality," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 62(2), pages 405-424, April.
    9. Chen, Ping-ho & Lai, Ching-chong & Chu, Hsun, 2016. "Welfare effects of tourism-driven Dutch disease: The roles of international borrowings and factor intensity," International Review of Economics & Finance, Elsevier, vol. 44(C), pages 381-394.
    10. Huanan Fu & Xiaochun Li, 2023. "Rural–urban migrants’ remittance and agricultural pollution in the presence of agricultural dualism," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 70(2), pages 535-558, April.
    11. Pi Jiancai & Zhou Yu, 2015. "International Factor Mobility, Production Cost Components, and Wage Inequality," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(2), pages 503-522, April.
    12. Cyrus Chu, C.Y. & Lai, Ching-Chong & Liao, Chih-Hsing, 2014. "How could the non-sustainable Easter Island have been sustained?," International Review of Economics & Finance, Elsevier, vol. 34(C), pages 161-174.
    13. Beladi, Hamid & Liu, Lu & Oladi, Reza, 2013. "On pollution permits and abatement," Economics Letters, Elsevier, vol. 119(3), pages 302-305.
    14. Chao, Chi-Chur & Laffargue, Jean-Pierre & Sgro, Pasquale M., 2012. "Environmental control, wage inequality and national welfare in a tourism economy," International Review of Economics & Finance, Elsevier, vol. 22(1), pages 201-207.
    15. Li, Xiaochun & Fu, Huanan & Wu, Yunyun, 2020. "Pollution mitigation, unemployment rate and wage inequality in the presence of agricultural pollution," China Economic Review, Elsevier, vol. 61(C).
    16. Huang, Zhi & Cheng, Xiang, 2023. "Environmental regulation and rural migrant workers’ job quality: Evidence from China migrants dynamic surveys," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 845-858.
    17. Jacob Wood & Gohar Feroz Khan, 2015. "International trade negotiation analysis: network and semantic knowledge infrastructure," Scientometrics, Springer;Akadémiai Kiadó, vol. 105(1), pages 537-556, October.
    18. Panos Hatzipanayotou & Sajal Lahiri & Michael S. Michael, 2002. "Can cross–border pollution reduce pollution?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 35(4), pages 805-818, November.
    19. John Christopher Beghin & Anne-Célia Disdier & Stéphan Marette, 2017. "Trade restrictiveness indices in the presence of externalities: An application to non-tariff measures," World Scientific Book Chapters, in: John Christopher Beghin (ed.), Nontariff Measures and International Trade, chapter 5, pages 81-104, World Scientific Publishing Co. Pte. Ltd..
    20. repec:spo:wpecon:info:hdl:2441/10184 is not listed on IDEAS
    21. Thierry Mayer, 2006. "Policy Coherence for Development: A Background Paper on Foreign Direct Investment," OECD Development Centre Working Papers 253, OECD Publishing.

    More about this item

    Keywords

    Tourism infrastructure; Environmental regulation; Welfare; Wage inequality;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jecrev:v:75:y:2024:i:1:d:10.1007_s42973-021-00109-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.