The Demands for Environmental Regulation and for Trade in the Presence of Private Mitigation
We study the nature of individual demands for environmental regulation and for trade openness in the general equilibrium of a small open economy where the environment is an input to production. Differences in the ability of individuals to afford private mitigation of the adverse consequences of pollution is a central feature of the analysis. Private mitigation leads to an endogenous, unequal distribution of the health-related consequences of pollution across income groups in a manner consistent with epidemiologic studies, in contrast to much of the literature which assumes equal health effects for all. We show that when private mitigation is possible at a cost, trade polarizes the interests of rich and poor with respect to the stringency of regulation. Moreover, even though trade has the potential to benefit everyone, the poor may oppose trade openness because of a concern that laxer environmental regulation will then be imposed in the interest of the rich. We explain why heterogeneity in the intensity of preferences, and not just in their direction, is likely to play a role in the determination of collective choices with respect to the regulation of the environment and of trade. We conclude by drawing out the implications of the analysis for the study of the political economy of the environment-trade-welfare nexus.
|Date of creation:||2008|
|Contact details of provider:|| Postal: Poschingerstrasse 5, 81679 Munich|
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo-group.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Seema Jayachandran, 2009.
"Air Quality and Early-Life Mortality: Evidence from Indonesia’s Wildfires,"
Journal of Human Resources,
University of Wisconsin Press, vol. 44(4).
- Seema Jayachandran, 2008. "Air Quality and Early-Life Mortality: Evidence from Indonesia's Wildfires," NBER Working Papers 14011, National Bureau of Economic Research, Inc.
- Rosado, Marcia A. & Cunha-E-S , Maria A. & Ducla-Soares, Maria M. & Nunes, Luis C., 2006. "Combining averting behavior and contingent valuation data: an application to drinking water treatment in Brazil," Environment and Development Economics, Cambridge University Press, vol. 11(06), pages 729-746, December.
- McKitrick, Ross & Collinge, Robert A., 2002.
"The Existence and Uniqueness of Optimal Pollution Policy in the Presence of Victim Defense Measures,"
Journal of Environmental Economics and Management,
Elsevier, vol. 44(1), pages 106-122, July.
- McKitrick, R. & Collinge, R.A., 1998. "The Existence and Uniqueness of Optimal Pollution Policy in the Presence of Victim Defense Measures," Working Papers 1998-6, University of Guelph, Department of Economics and Finance.
- Kahn, Matthew E & Matsusaka, John G, 1997. "Demand for Environmental Goods: Evidence from Voting Patterns on California Initiatives," Journal of Law and Economics, University of Chicago Press, vol. 40(1), pages 137-73, April.
- Hettich,Walter & Winer,Stanley L., 1999.
"Democratic Choice and Taxation,"
Cambridge University Press, number 9780521622912, October.
- Hanna, Brid Gleeson, 2007. "House values, incomes, and industrial pollution," Journal of Environmental Economics and Management, Elsevier, vol. 54(1), pages 100-112, July.
- Brooks, Nancy & Sethi, Rajiv, 1997. "The Distribution of Pollution: Community Characteristics and Exposure to Air Toxics," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 233-250, February.
- Coughlin, Peter & Nitzan, Shmuel, 1981. "Electoral outcomes with probabilistic voting and Nash social welfare maxima," Journal of Public Economics, Elsevier, vol. 15(1), pages 113-121, February.
- McAusland, Carol, 2003. "Voting for pollution policy: the importance of income inequality and openness to trade," Journal of International Economics, Elsevier, vol. 61(2), pages 425-451, December.
- Jamie Pearce & Simon Kingham & Peyman Zawar-Reza, 2006. "Every breath you take? Environmental justice and air pollution in Christchurch, New Zealand," Environment and Planning A, Pion Ltd, London, vol. 38(5), pages 919-938, May.
- Fredriksson, Per G., 1997. "The Political Economy of Pollution Taxes in a Small Open Economy," Journal of Environmental Economics and Management, Elsevier, vol. 33(1), pages 44-58, May.
- Pethig, Rudiger, 1976. "Pollution, welfare, and environmental policy in the theory of Comparative Advantage," Journal of Environmental Economics and Management, Elsevier, vol. 2(3), pages 160-169, February.
- Schleich, Joachim, 1999. "Environmental quality with endogenous domestic and trade policies1," European Journal of Political Economy, Elsevier, vol. 15(1), pages 53-71, March.
- Chichilnisky, Graciela, 1994. "North-South Trade and the Global Environment," American Economic Review, American Economic Association, vol. 84(4), pages 851-74, September.
- Verdier, Thierry, 2004. "Socially Responsible Trade Integration: A Political Economy Perspective," CEPR Discussion Papers 4699, C.E.P.R. Discussion Papers.
- Aidt, Toke S., 1998. "Political internalization of economic externalities and environmental policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 1-16, July.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_2509. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klaus Wohlrabe)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.