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Reforms of Environmental Policies in the Presence of Cross-border Pollution and two Stage Clean Up

  • Panos Hatzipanayotou
  • Sajal Lahiri
  • Michael S. Michael

We construct a two-country model where pollution from production is transmitted across borders. Pollution abatement is undertaken sequentially by private producers and the public sector. We characterize the Nash optimal levels of the policy instruments in the two countries: emission taxes and funds allocated for public abatement activities. We examine the implications of a number of multilateral policy reforms. One of our findings is that the magnitude of the beneficial effect of a reform depends on the scope of the reform, and if it is restricted to a subset of policy instruments, then the efficacy of environmental policy reform can be greatly undermined.

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File URL: http://papers.econ.ucy.ac.cy/RePEc/papers/0203.pdf
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Paper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 0203.

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Length: 31 pages
Date of creation: Mar 2002
Date of revision:
Handle: RePEc:ucy:cypeua:0203
Contact details of provider: Web page: http://www.econ.ucy.ac.cy

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