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Intra-Industry Trade in Dirty Goods and Environmental Policies

  • Sen, Anindita

In this paper we study the effect of intra-industry trade in an environmental-quality differentiated good on the pollution level in a two-country framework when there are strategic interactions between the firms in the two countries. The pro-competitive effect of intra-industry trade expands the scale of production and, therefore, increases pollution in both the countries. Effect on the strategic choice of environmental qualities of the good is, on the other hand, asymmetric for the two producers. Impact of environmental policies like pollution content production tax and tariff on trade and pollution levels are also studied. .

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 49167.

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Date of creation: 15 Jun 2013
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Handle: RePEc:pra:mprapa:49167
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  1. Brian R. Copeland & M. Scott Taylor, 1995. "Trade, Spatial Separation, and the Environment," NBER Working Papers 5242, National Bureau of Economic Research, Inc.
  2. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 113-31, June.
  3. James Brander, 1980. "Intra-Industry Trade in Identical Commodities," Working Papers 380, Queen's University, Department of Economics.
  4. 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.
  5. Sen, Anindita & Acharyya, Rajat, 2012. "Environmental standard and employment: impact of productivity effect," Environment and Development Economics, Cambridge University Press, vol. 17(02), pages 207-225, April.
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