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Trade and transboundary pollution: quantifying the effects of trade liberalization on CO 2 emissions

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  • Timothy P. Hubbard

Abstract

I consider a multi-country trade model in which a subset of firms emit transboundary pollution as a by-product of production. Consumers are harmed by these emissions, creating a role for government intervention. Theoretically, the effects of trade liberalization on the level of pollution and aggregate welfare are ambiguous -- they depend on values of country-specific pollution disutility parameters. I use real-world data to estimate trade costs and to recover values for these disutility parameters that are consistent with the Nash--Walras equilibrium predicted by the model. In counterfactual exercises, I investigate the effects of changing trade costs on the aggregate level and distribution of pollution as well as the welfare of each country. These experiments suggest concern regarding the effect further trade liberalization has on the level of firm-generated pollution and that agreements like the Kyoto Protocol can be effective even when governments behave strategically.

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  • Timothy P. Hubbard, 2014. "Trade and transboundary pollution: quantifying the effects of trade liberalization on CO 2 emissions," Applied Economics, Taylor & Francis Journals, vol. 46(5), pages 483-502, February.
    • Handle: RePEc:taf:applec:v:46:y:2014:i:5:p:483-502
    DOI: 10.1080/00036846.2013.857000
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    Cited by:

    1. Thomas Jobert & Fatih Karanfil & Anna Tykhonenko, 2012. "Trade and Environment: Further Empirical Evidence from Heterogeneous Panels Using Aggregate Data," GREDEG Working Papers 2012-15, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    2. Duan, Yuwan & Ji, Ting & Lu, Yi & Wang, Siying, 2021. "Environmental regulations and international trade: A quantitative economic analysis of world pollution emissions," Journal of Public Economics, Elsevier, vol. 203(C).
    3. Malika Sahel, 2022. "People Exchange: A British Councils Post-Colonial Distinguished Cultural Investment," European Journal of Social Sciences Articles, Revistia Research and Publishing, vol. 5, July -Dec.
    4. Yadira Mori-Clement & Stefan Nabernegg & Birgit Bednar-Friedl, 2018. "Can preferential trade agreements enhance renewable electricity generation in emerging economies? A model-based policy analysis for Brazil and the European Union," Graz Economics Papers 2018-19, University of Graz, Department of Economics.

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