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The Environment and International Trade

Author

Listed:
  • Chou, Chien-Fu
  • Melmed-Sanjak, Jolyne
  • Shy, Oz

Abstract

The relationship between international trade and environmental degradation is analyzed in this short paper. Environmental attributes are modeled as differentiated, non-tradeable goods. The results derived from the model indicate that when consumers view consumption goods and environmental attributes as substitutes and if consumers place a relatively higher value on environmental variety than on commodity variety, the opening of trade may reduce the welfare of the trading countries. A net welfare loss may occur as exchange gains from trade are reduced or eliminated by environmental losses.

Suggested Citation

  • Chou, Chien-Fu & Melmed-Sanjak, Jolyne & Shy, Oz, 1991. "The Environment and International Trade," Foerder Institute for Economic Research Working Papers 275515, Tel-Aviv University > Foerder Institute for Economic Research.
    • Handle: RePEc:ags:isfiwp:275515
    DOI: 10.22004/ag.econ.275515
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    References listed on IDEAS

    as
    1. Maler, Karl-Goran, 1985. "Welfare economics and the environment," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 1, chapter 1, pages 3-60, Elsevier.
    2. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
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    Cited by:

    1. Chahreddine ABBES, 2009. "When Free Trade is Good for the Environment?," EcoMod2009 21500000, EcoMod.

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