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Environmental Policy And Trade Liberalization: The Case Of Transboundary Pollution From Consumption


  • Kenji Fujiwara

    () (Kwansei Gakuin University)


This paper develops a reciprocal market model of international duopoly with transboundary pollution from consumption to examine the effects of bilateral tariff reductions on the equilibrium pollution tax and welfare. We show that tariff reductions induce each country to raise an emission tax and that trade liberalization is welfare-improving if the parameter of pollution damages is suciently large. These results are in contrast to the case of production-generated pollution and we seek the reason for this contrast.

Suggested Citation

  • Kenji Fujiwara, 2010. "Environmental Policy And Trade Liberalization: The Case Of Transboundary Pollution From Consumption," Discussion Paper Series 61, School of Economics, Kwansei Gakuin University, revised Nov 2010.
  • Handle: RePEc:kgu:wpaper:61

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    Cited by:

    1. Chen, Xudong & Huang, Bihong, 2016. "Club membership and transboundary pollution: Evidence from the European Union enlargement," Energy Economics, Elsevier, vol. 53(C), pages 230-237.

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    consumption-generated pollution; tariff reduction; emission tax; international duopoly.;

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