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A Dynamic Analysis Of Protection And Environmental Policy In A Small Trading Developing Country

In: Dynamic And Stochastic Approaches To The Environment And Economic Development

Author

Listed:
  • Amitrajeet A. Batabyal

    (Rochester Institute of Technology, USA)

  • Hamid Beladi

Abstract

We analyze a dynamic model of protection and environmental policy in a small trading developing country (DC). The DC government protects the import competing (and the polluting) sector of the economy with a tariff. The employment and output effects of three different pollution taxes are analyzed. These taxes incorporate different assumptions about the DC government's ability to commit to its announced policy. First, we describe the taxes, we study the dependence of these taxes on the tariff, and we show that in general an activist environmental policy is called for, irrespective of the length of time to which the government can commit to its announced policy. Second, we identify a situation in which the conduct of environmental policy raises welfare unambiguously, and the situations in which it does not do so. Finally, we show that the time inconsistency of certain optimal programs can prevent the DC government from achieving its environmental and employment objectives.

Suggested Citation

  • Amitrajeet A. Batabyal & Hamid Beladi, 2008. "A Dynamic Analysis Of Protection And Environmental Policy In A Small Trading Developing Country," World Scientific Book Chapters, in: Dynamic And Stochastic Approaches To The Environment And Economic Development, chapter 11, pages 189-212, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789812772015_0011
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    1. is not listed on IDEAS
    2. repec:ebl:ecbull:v:15:y:2007:i:9:p:1-10 is not listed on IDEAS
    3. Adile TAMGUICHT, 2007. "Public versus personal welfare: an aspect of environmental policymaking in developing countries," Economics Bulletin, AccessEcon, vol. 15(9), pages 1-10.
    4. White, Leroy & Smith, Honora & Currie, Christine, 2011. "OR in developing countries: A review," European Journal of Operational Research, Elsevier, vol. 208(1), pages 1-11, January.
    5. Amitrajeet A. Batabyal, 2008. "Public Versus Personal Welfare: An Aspect Of Environmental Policymaking In Developing Countries," World Scientific Book Chapters, in: Dynamic And Stochastic Approaches To The Environment And Economic Development, chapter 13, pages 227-239, World Scientific Publishing Co. Pte. Ltd..
    6. Sounderpandian, Jayavel & Prasad, Sameer & Madan, Manu, 2008. "Supplies from developing countries: Optimal order quantities under loss risks," Omega, Elsevier, vol. 36(1), pages 122-130, February.

    More about this item

    Keywords

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    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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