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Reforms of Environmental Policies in the presence of Cross-border Pollution and Two-stage Clean-up

  • Hatzipanayotou, Panos

    (Athens University of Economics and Business)

  • Sajal Lahiri

    (University of Essex)

  • Michael S.Michael

    (University of Cyprus)

We construct a two-country model where pollution from production is transmitted across borders. Pollution abatement is undertaken sequentially by private producers and the public sector. We characterize the Nash optimal levels of the policy instruments in the two countries: emission taxes and funds allocated for public abatement activities. We examine the implications of a number of multilateral policy reforms. One of our findings is that the magnitude of the beneficial effect of a reform depends on the scope of the reform, and if it is restricted to a subset of policy instruments, then the efficacy of environmental policy reform can be greatly undermined.

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Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2002 with number 97.

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Date of creation: 29 Aug 2002
Date of revision:
Handle: RePEc:ecj:ac2002:97
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