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Trade, Transboundary Pollution and Market Size

  • Forslid, Rikard

    ()

    (Dept. of Economics, Stockholm University)

  • Okubo, Toshihiro

    ()

    (Keio University)

  • Sanctuary, Mark

    ()

    (Dept. of Economics, Stockholm University)

This paper uses a monopolistic competitive framework with many sectors to study the impact of trade liberalization on local and global emissions. We focus on the interplay of the pollution haven effect and the home market effect and show how a large-market advantage can counterbalance a high emission tax, implying that trade liberalization leads to lower global emissions. Generally, our results suggest that relative market size, the level of trade costs, the ease of abatement, and the degree of product differentiation at the sector level are relevant variables for empirical studies on trade and pollution.

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File URL: http://www2.ne.su.se/paper/wp13_08.pdf
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Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2013:8.

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Length: 15 pages
Date of creation: 17 Apr 2013
Date of revision:
Handle: RePEc:hhs:sunrpe:2013_0008
Contact details of provider: Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
Phone: +46 8 16 20 00
Fax: +46 8 16 14 25
Web page: http://www.ne.su.se/
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  1. Pfluger, Michael, 2001. " Ecological Dumping under Monopolistic Competition," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 689-706, December.
  2. Josh Ederington & Arik Levinson & Jenny Minier, 2003. "Footloose and Pollution-Free," NBER Working Papers 9718, National Bureau of Economic Research, Inc.
  3. Matthew A. Cole & Robert J.R. Elliott & Toshihiro Okubo, 2010. "Trade, Environmental Regulations and Industrial Mobility: An Industry-Level Study of Japan," Discussion Paper Series DP2010-22, Research Institute for Economics & Business Administration, Kobe University.
  4. Jota Ishikawa & Toshihiro Okubo, 2008. "Greenhouse-gas Emission Controls and International Carbon Leakage through Trade Liberalization," Discussion Paper Series 231, Research Institute for Economics & Business Administration, Kobe University.
  5. Rauscher, Michael, 1997. "International Trade, Factor Movements, and the Environment," OUP Catalogue, Oxford University Press, number 9780198290506, March.
  6. Nicole G├╝rtzgen & Michael Rauscher, 2000. "Environmental Policy, Intra-Industry Trade and Transfrontier Pollution," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 17(1), pages 59-71, September.
  7. Dao-Zhi Zeng & Laixun Zhao, 2006. "Pollution Havens and Industrial Agglomeration," Discussion Paper Series 197, Research Institute for Economics & Business Administration, Kobe University.
  8. Copeland, Brian R & Taylor, M Scott, 1994. "North-South Trade and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 755-87, August.
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