North-South Trade and the Environment
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. The authors 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, they 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. Copyright 1994, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Volume (Year): 109 (1994)
Issue (Month): 3 (August)
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