IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/5242.html
   My bibliography  Save this paper

Trade, Spatial Separation, and the Environment

Author

Listed:
  • Brian R. Copeland
  • M. Scott Taylor

Abstract

We develop a simple two-sector dynamic model to examine the effects of international trade in the presence of pollution-created cross- sectoral production externalities. We assume that the production of 'Smokestack' manufactures generates pollution, which lowers the productivity of an environmentally sensitive sector ('Farming'). As a result, the long run production set is non-convex. Pollution provides a motive for trade, since trade can spatially separate incompatible industries. Two identical, unregulated countries will gain from trade if the share of world income spent on Smokestack is high. In contrast, when the share of world income spent on the dirty good is low, trade can usher in a negatively reinforcing process of environmental degradation and real income loss for the exporter of Smokestack.

Suggested Citation

  • Brian R. Copeland & M. Scott Taylor, 1995. "Trade, Spatial Separation, and the Environment," NBER Working Papers 5242, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:5242
    Note: ITI EEE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w5242.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dean, Judith M., 1992. "Trade and the environment : a survey of the literature," Policy Research Working Paper Series 966, The World Bank.
    2. Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
    3. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
    4. Helfand Gloria E. & Rubin Jonathan, 1994. "Spreading versus Concentrating Damages: Environmental Policy in the Presence of Nonconvexities," Journal of Environmental Economics and Management, Elsevier, vol. 27(1), pages 84-91, July.
    5. Baumol, William J & Bradford, David F, 1972. "Detrimental Externalities and Non-Convexity of the Production Set," Economica, London School of Economics and Political Science, vol. 39(154), pages 160-176, May.
    6. James R. Markusen, 1975. "Cooperative Control of International Pollution and Common Property Resources," The Quarterly Journal of Economics, Oxford University Press, vol. 89(4), pages 618-632.
    7. Ethier, Wilfred J, 1982. "Decreasing Costs in International Trade and Frank Graham's Argument for Protection," Econometrica, Econometric Society, vol. 50(5), pages 1243-1268, September.
    8. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-737, September.
    9. Markusen, James R., 1975. "International externalities and optimal tax structures," Journal of International Economics, Elsevier, vol. 5(1), pages 15-29, February.
    10. Lopez Ramon, 1994. "The Environment as a Factor of Production: The Effects of Economic Growth and Trade Liberalization," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 163-184, September.
    11. Brian R. Copeland & M. Scott Taylor, 1994. "North-South Trade and the Environment," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 755-787.
    12. Rauscher, Michael, 1991. "National environmental policies and the effects of economic integration," European Journal of Political Economy, Elsevier, vol. 7(3), pages 313-329, October.
    13. James R. Melvin, 1969. "Increasing Returns to Scale as a Determinant of Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 2(3), pages 389-402, August.
    14. Burrows, Paul, 1986. "Nonconvexity induced by external costs on production: Theoretical curio or policy dilemma?," Journal of Environmental Economics and Management, Elsevier, vol. 13(2), pages 101-128, June.
    15. Smulders, J.A., 1994. "Growth, market structure and the environment : Essays on the theory of endogenous economic growth," Other publications TiSEM e17273fd-e91e-4b68-a127-a, Tilburg University, School of Economics and Management.
    16. Panagariya, Arvind, 1981. "Variable Returns to Scale in Production and Patterns of Specialization," American Economic Review, American Economic Association, vol. 71(1), pages 221-230, March.
    17. Helpman, Elhanan, 1984. "Increasing returns, imperfect markets, and trade theory," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.),Handbook of International Economics, edition 1, volume 1, chapter 7, pages 325-365, Elsevier.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:5242. 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: (). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.