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The Political Economy of Strategic Environmental Policy When Waste Products are Tradable

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  • Thomas Kuhn
  • James Cassing

Abstract

In this paper we explore the implications of the possibility of “trade in trash†on optimal environmental policy and on the ramifications of a stronger or weaker environmental lobby across regions or nations. We have constructed a multiple stage game composed of a market stage and a policy stage. Waste might be exported to some less developed countries to get rid of any damages linked to waste treatment and disposal. Waste markets are imperfect where waste exporters exploit market power. We find that environmentalists do not necessarily succeed in pushing stricter environmental policy nor do industrialists in pushing weaker due to the fact that lobbying may be offset by terms of trade effects. As it happens, even stronger environmental sentiment in all nations need not lead to increased protection of the environment globally

Suggested Citation

  • Thomas Kuhn & James Cassing, 2004. "The Political Economy of Strategic Environmental Policy When Waste Products are Tradable," Econometric Society 2004 Far Eastern Meetings 770, Econometric Society.
    • Handle: RePEc:ecm:feam04:770
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    References listed on IDEAS

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    1. Kennedy Peter W., 1994. "Equilibrium Pollution Taxes in Open Economies with Imperfect Competition," Journal of Environmental Economics and Management, Elsevier, vol. 27(1), pages 49-63, July.
    2. Copeland, Brian R., 1991. "International trade in waste products in the presence of illegal disposal," Journal of Environmental Economics and Management, Elsevier, vol. 20(2), pages 143-162, March.
    3. Althammer Wilhelm & Buchholz Wolfgang, 1999. "Distorting Environmental Taxes: The Role of the Market Structure / Zweitbeste Umweltabgaben: Die Rolle der Marktstruktur bei internationalem Handel," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 219(3-4), pages 257-270, June.
    4. R. Simpson, 1995. "Optimal pollution taxation in a Cournot duopoly," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 6(4), pages 359-369, December.
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    JEL classification:

    • F1 - International Economics - - Trade
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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