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Environmental Funds, Terms of Trade, and Welfare

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  • Takumi HAIBARA

Abstract

We investigate the economic consequences of international environmental liabilities, for which environmental funds are used to provide compensation for pollution damage. We assume two large open economies that consist of a polluter and a pollutee, and the polluter country confers international transfers, which are financed by pollution tax revenue, as a means of compensation for pollution damage inflicted upon the pollutee. Within this framework, we develop the condition that an increase in the pollution tax enriches (impoverishes) the pollutee (polluter) through a change in the terms of trade, the amount of the transfers, and the amount of pollution.

Suggested Citation

  • Takumi HAIBARA, 2007. "Environmental Funds, Terms of Trade, and Welfare," GSICS Working Paper Series 15, Graduate School of International Cooperation Studies, Kobe University.
    • Handle: RePEc:kcs:wpaper:15
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    File URL: http://www.research.kobe-u.ac.jp/gsics-publication/gwps/2007-15.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Environmental funds; Pollution taxes; Terms of trade; Welfare;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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