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Domestic and international strategic interactions in environment policy formation

Author

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  • Kazuharu Kiyono
  • Masahiro Okuno-Fujiwara

Abstract

In this paper, we establish the most possilbe general formulation of the technology governing carbon-gas emission, giving rise to global external diseconomies, and ty to explore into the strategic interactions,both domestic and international, when an individual country decides on the environmental policies. Through the comparison among emission taxes, quotas, and standard in the perfectly competitive private economies, we find that the first two policies are equivalent but they are different in effects by virtue of what we may call the tax-exemption effect of emission standards. Such a difference in the policy effect further affects the other country's welfare through the global externalities, amplified through whether the government can precommit to either the emission tax or the emission standard. Copyright Springer-Verlag Berlin Heidelberg 2003

Suggested Citation

  • Kazuharu Kiyono & Masahiro Okuno-Fujiwara, 2003. "Domestic and international strategic interactions in environment policy formation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(2), pages 613-633, March.
  • Handle: RePEc:spr:joecth:v:21:y:2003:i:2:p:613-633
    DOI: 10.1007/s00199-002-0300-0
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    Citations

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    Cited by:

    1. Harvey E. Lapan & Shiva Sikdar, 2011. "Strategic Environmental Policy under Free Trade with Transboundary Pollution," Review of Development Economics, Wiley Blackwell, vol. 15(1), pages 1-18, February.
    2. Kazuhiko Kato, 2011. "Emission quota versus emission tax in a mixed duopoly," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 13(1), pages 43-63, January.
    3. Shuichi Ohori, 2011. "Environmental policy instruments and foreign ownership," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 13(1), pages 65-78, January.
    4. Sikdar, Shiva, 2008. "Essays in macroeconomics, international trade and the environment," ISU General Staff Papers 2008010108000016832, Iowa State University, Department of Economics.

    More about this item

    Keywords

    Keywords and Phrases: Global warming; Emission tax; Emission quota; Emission standard; Strategic interaction; Tax exemption.; JEL Classification Numbers: D61; D78; H23; H77.;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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