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Cooperation in Environmental Policy: A Spatial Approach

  • Ronald B. Davies

    ()

    (University of Oregon Economics Department)

  • Helen T. Naughton

    ()

    (University of Oregon Economics Department)

Inefficient competition in emissions taxes creates benefits from international cooperation. In the presence of cross-border pollution, proximate (neighboring) countries may have greater incentives to cooperate than distant ones as illustrated by a model of tax competition for mobile capital. Spatial econometrics is used to estimate participation in 37 international environmental treaties. Data on 41 countries from 1980-1999 reveal evidence of increased cooperation among proximate countries. Furthermore, the results indicate that FDI usually increases treaty participation. We also find that both OECD and non-OECD countries respond positively to OECD countriesÂ’ participation but the response to non-OECD countries is primarily from similar countries. This suggests that the rich countries may lead others in setting environmental quality.

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Paper provided by University of Oregon Economics Department in its series University of Oregon Economics Department Working Papers with number 2006-18.

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Length: 46
Date of creation: 10 Apr 2003
Date of revision: 10 Jun 2003
Handle: RePEc:ore:uoecwp:2006-18
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