Do positive agricultural externalities provide a justification against trade liberalisation?
This paper analyses the welfare effects of agricultural trade liberalisation when taking into account the positive environmental externalities of European farming. We show that free trade is suboptimal, if no efficient environmental policy addressing the provision of multifunctional amenities is implemented. However, tariff reductions in a net-importing country will increase the incentive for introducing an environmental policy, though this policy will be strategically distorted. Despite its strategic character, introducing an optimal environmental policy, when simultaneously abolishing a tariff policy in an importing country, will unambiguously enhance global welfare.
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|Date of creation:||Jun 2005|
|Date of revision:|
|Publication status:||Published in Cahiers d'Economie et Sociologie Rurales. No. 82-83, 57-72. (title: Agricultural multifunctionality and trade liberalisation; revised version)|
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