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Export Processing Zones and Environmental Policy

Author

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  • Yasuyuki Sugiyama

    () (Graduate School of Economics, Osaka University)

Abstract

This paper investigates the relation between an export processing zone and a pollution quota in a small country. The model suppose that the pollution target is implemented with a marketable permit system, and the government sets the quota to maximize domestic welfare. Then we show that, if an increase in real income reduces marginal external damage, the pollution quota is relieved by the formation of an export processing zone. However, if the marginal damage is augmented with an increase in the income, the optimal quota might be strengthened by the formation of the zone.

Suggested Citation

  • Yasuyuki Sugiyama, 2006. "Export Processing Zones and Environmental Policy," Discussion Papers in Economics and Business 06-22, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  • Handle: RePEc:osk:wpaper:0622
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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0622.pdf
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    References listed on IDEAS

    as
    1. Miyagiwa, Kaz F., 1986. "A reconsideration of the welfare economics of a free-trade zone," Journal of International Economics, Elsevier, vol. 21(3-4), pages 337-350, November.
    2. Beladi, Hamid & Chao, Chi-Chur & Frasca, Ralph, 1999. "Foreign investment and environmental regulations in LDCs," Resource and Energy Economics, Elsevier, vol. 21(2), pages 191-199, May.
    3. Hamada, Koichi, 1974. "An economic analysis of the duty-free zone," Journal of International Economics, Elsevier, vol. 4(3), pages 225-241, August.
    4. Brian R. Copeland & M. Scott Taylor, 2004. "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 7-71, March.
    5. Devereux, John & Chen, Lein Lein, 1995. "Export Zones and Welfare: Another Look," Oxford Economic Papers, Oxford University Press, vol. 47(4), pages 704-713, October.
    6. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-737, September.
    7. Copeland Brian R., 1994. "International Trade and the Environment: Policy Reform in a Polluted Small Open Economy," Journal of Environmental Economics and Management, Elsevier, vol. 26(1), pages 44-65, January.
    8. Albert G. Schweinberger, 2003. "Special economic zones and quotas on imported intermediate goods: a policy proposal," Oxford Economic Papers, Oxford University Press, vol. 55(4), pages 696-715, October.
    9. Din, Musleh-ud, 1994. "Export processing zones and backward linkages," Journal of Development Economics, Elsevier, vol. 43(2), pages 369-385, April.
    10. Madani, Dorsati, 1999. "A review of the role and impact of export processing zones," Policy Research Working Paper Series 2238, The World Bank.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    export processing zone; international trade; environmental policy; pollution;

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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