IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Per-Capita Income as a Determinant of International Trade and Environmental Policies

  • Markusen, James R.

International trade policy analysis has tended to focus on the production side of general equilibrium, with policies such as a tariff or carbon tax affecting international and internal income distributions through a Heckscher-Ohlin nexus of factor intensities and factor endowments. Here I move away from this structure to focus on demand, preferences, and endogenous policy in a trade/environment setting by assuming a high income elasticity of demand for environmental quality. I show how both non-cooperative and cooperative abatement policies in a two-country (rich and poor) setting are affected by non-homotheticity. I examine “issue linking” in international bargaining, in which one country is both large and rich, and hence has both a high tariff and a high abatement effort in a non-cooperative equilibrium. Several cooperative bargaining agreements are computed under alternative assumptions about linking or separating trade and environment negotiations. A final exercise considers “policy leakage”, in which one country has an incentive to reduce its optimal abatement effort when the other country increases its effort. The paper will also introduce many readers to a new solver in GAMS for a class of problems referred to as MPECs: mathematical programming with equilibrium constraints. This problem class has wide applications in economics, including solving for multiple optimal tax rates to provide public goods, redistribute income, internalize externalities, exploit monopoly power in trade and so forth, when the underlying general-equilibrium model is a set of constraints on the optimization problem.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/25791/1/070econDP13-06.pdf
Download Restriction: no

Paper provided by Graduate School of Economics, Hitotsubashi University in its series Discussion Papers with number 2013-06.

as
in new window

Length: 23, [10] p.
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:hit:econdp:2013-06
Contact details of provider: Phone: +81-42-580-8000
Web page: http://www.econ.hit-u.ac.jp/

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.:

as in new window
  1. Deacon, Robert & Norman, Catherine S, 2004. "Is the environmental Kuznets curve an empirical regularity?," University of California at Santa Barbara, Economics Working Paper Series qt2m44f7kr, Department of Economics, UC Santa Barbara.
  2. Ignatius J. Horstmann & James R. Markusen & Jack Robles, 2001. "Multi-Issue Bargaining and Linked Agendas: Ricardo Revisited or No Pain No Gain," NBER Working Papers 8347, National Bureau of Economic Research, Inc.
  3. Brian R. Copeland & M. Scott Taylor, 2003. "Trade, Growth and the Environment," NBER Working Papers 9823, National Bureau of Economic Research, Inc.
  4. James R. Markusen, 2010. "Putting Per-Capita Income Back into Trade Theory," NBER Working Papers 15903, National Bureau of Economic Research, Inc.
  5. Fernando Broner & Paula Bustos & Vasco M. Carvalho, 2012. "Sources of Comparative Advantage in Polluting Industries," NBER Working Papers 18337, National Bureau of Economic Research, Inc.
  6. Limao, Nuno, 2005. "Trade policy, cross-border externalities and lobbies: do linked agreements enforce more cooperative outcomes?," Journal of International Economics, Elsevier, vol. 67(1), pages 175-199, September.
  7. Caron, Justin & Fally, Thibault & Markusen, James R., 2012. "Skill Premium and Trade Puzzles: A Solution Linking Production and Preferences," CEPR Discussion Papers 8999, C.E.P.R. Discussion Papers.
  8. Bard Harstad, 2012. "Climate Contracts: A Game of Emissions, Investments, Negotiations, and Renegotiations," Review of Economic Studies, Oxford University Press, vol. 79(4), pages 1527-1557.
  9. Conconi, P. & Perroni, C., 2000. "Issue Linkage and Issue Tie-in in Multilateral Negotiations," The Warwick Economics Research Paper Series (TWERPS) 558, University of Warwick, Department of Economics.
  10. Hunter, Linda, 1991. "The contribution of nonhomothetic preferences to trade," Journal of International Economics, Elsevier, vol. 30(3-4), pages 345-358, May.
  11. Copeland, Brian R. & Taylor, M. Scott, 2005. "Free trade and global warming: a trade theory view of the Kyoto protocol," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 205-234, March.
  12. Lisandro Abrego & Carlo Perroni & John Whalley & Randall M. Wigle, 1999. "Trade and Environment: Bargaining Outcomes from Linked Negotiations," CSGR Working papers series 27/99, Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick.
  13. Gori, Giuseppe Francesco & Lambertini, Luca, 2013. "Trade liberalisation between asymmetric countries with environmentally concerned consumers," Regional Science and Urban Economics, Elsevier, vol. 43(4), pages 549-560.
  14. Markusen, James R & Wigle, Randall M, 1989. "Nash Equilibrium Tariffs for the United States and Canada: The Roles of Country Size, Scale Economies, and Capital Mobility," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 368-86, April.
  15. Markusen, James R, 1986. "Explaining the Volume of Trade: An Eclectic Approach," American Economic Review, American Economic Association, vol. 76(5), pages 1002-11, December.
  16. Markusen, James R, 1975. "Cooperative Control of International Pollution and Common Property Resources," The Quarterly Journal of Economics, MIT Press, vol. 89(4), pages 618-32, November.
  17. John P. Tang, 2010. "Pollution Havens and the Trade in Toxic Chemicals: Evidence from U.S. Trade Flows," Working Papers 10-12, Center for Economic Studies, U.S. Census Bureau.
  18. Yi-Bin Chiu, 2012. "Deforestation and the Environmental Kuznets Curve in Developing Countries: A Panel Smooth Transition Regression Approach," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 60(2), pages 177-194, 06.
  19. Abrego, Lisandro, et al, 2001. "Trade and Environment: Bargaining Outcomes from Linked Negotiations," Review of International Economics, Wiley Blackwell, vol. 9(3), pages 414-28, August.
  20. B�rd Harstad, 2012. "Buy Coal! A Case for Supply-Side Environmental Policy," Journal of Political Economy, University of Chicago Press, vol. 120(1), pages 77 - 115.
  21. Bengt Kristrom & Pere Riera, 1996. "Is the income elasticity of environmental improvements less than one?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 7(1), pages 45-55, January.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:hit:econdp:2013-06. 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: (Digital Resources Section, Hitotsubashi University Library)

The email address of this maintainer does not seem to be valid anymore. Please ask Digital Resources Section, Hitotsubashi University Library to update the entry or send us the correct address

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.