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Is Free Trade Good for the Environment?

  • Werner Antweiler
  • Brian R. Copeland
  • M. Scott Taylor

This paper sets out a theory of how openness to international goods markets affects pollution concentrations. We develop a theoretical model to divide trade's impact on pollution into scale, technique, and composition effects and then examine this theory using data on sulfur dioxide concentrations when it alters the composition, and hence the pollution intensity, of national output. Our estimates of the associated technique and scale efforts created by trade imply a net reduction in pollution from these sources. Combining our estimates of scale, composition, and technique efforts yields a somewhat surprising conclusion: freer trade appears to be good for the environment.

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File URL: http://www.nber.org/papers/w6707.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6707.

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Date of creation: Aug 1998
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Publication status: published as Antweiler, Werner, Brian R. Copeland and M. Scott Taylor. "Is Free Trade Good For The Environment?," American Economic Review, 2001, v91(4,Sep), 877-908.
Handle: RePEc:nbr:nberwo:6707
Note: ITI
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  1. Grossman, Gene & Krueger, Alan B, 1992. "Environmental Impacts of a North American Free Trade Agreement," CEPR Discussion Papers 644, C.E.P.R. Discussion Papers.
  2. Pethig, Rudiger, 1976. "Pollution, welfare, and environmental policy in the theory of Comparative Advantage," Journal of Environmental Economics and Management, Elsevier, vol. 2(3), pages 160-169, February.
  3. Kenneth Y. Chay & Michael Greenstone, 1999. "The Impact of Air Pollution on Infant Mortality: Evidence from Geographic Variation in Pollution Shocks Induced by a Recession," NBER Working Papers 7442, National Bureau of Economic Research, Inc.
  4. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001. "Is Free Trade Good for the Environment?," American Economic Review, American Economic Association, vol. 91(4), pages 877-908, September.
  5. Gale, Lewis R. & Mendez, Jose A., 1998. "The empirical relationship between trade, growth and the environment," International Review of Economics & Finance, Elsevier, vol. 7(1), pages 53-61.
  6. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-37, September.
  7. J. P. Neary (ed.), 1995. "International Trade," Books, Edward Elgar, volume 0, number 575, 6.
  8. Revesz, Richard L. & Stavins, Robert N., 2007. "Environmental Law," Handbook of Law and Economics, Elsevier.
  9. McGuire, Martin C., 1982. "Regulation, factor rewards, and international trade," Journal of Public Economics, Elsevier, vol. 17(3), pages 335-354, April.
  10. Jose Mendez & Lewis Gale, . "A Note on the Empirical Relationship Between Trade, Growth and the Environment," Working Papers 2132836, Department of Economics, W. P. Carey School of Business, Arizona State University.
  11. Shafik, Nemat, 1994. "Economic Development and Environmental Quality: An Econometric Analysis," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 757-73, Supplemen.
  12. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
  13. 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.
  14. Gene M. Grossman & Alan B. Krueger, 1994. "Economic Growth and the Environment," NBER Working Papers 4634, National Bureau of Economic Research, Inc.
  15. Moulton, Brent R, 1987. "Diagnostics for Group Effects in Regression Analysis," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(2), pages 275-82, April.
  16. 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.
  17. Jeffrey Sachs & Andrew Warner, 1995. "Economic Reform and the Progress of Global Integration," Harvard Institute of Economic Research Working Papers 1733, Harvard - Institute of Economic Research.
  18. Tobey, James A, 1990. "The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test," Kyklos, Wiley Blackwell, vol. 43(2), pages 191-209.
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