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Dynamic environmental policy in developing countries with a dual economy

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  • D. Lee
  • A. Batabyal

Abstract

We analyze a dynamic model of environmental policy in a stylized developing country (DC) with a dual economy. This DC’s economy is distorted because the government subsidizes the exports of the non-polluting sector of the economy. We analyze the employment and output effects of three different pollution taxes. These taxes incorporate alternate assumptions about the DC government’s ability to commit to its announced course of action. We describe the taxes, we examine the dependence of these taxes on the extant distortion, and we stipulate the conditions that call for an activist policy, irrespective of the length of time to which the government can commit to its announced policy. Inter alia, our analysis shows why some DC governments may not be serious about environmental protection.

Suggested Citation

  • D. Lee & A. Batabyal, "undated". "Dynamic environmental policy in developing countries with a dual economy," Working Papers 2000-29, Utah State University, Department of Economics.
  • Handle: RePEc:usu:wpaper:2000-29
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    File URL: ftp://repec.bus.usu.edu/RePEc/usu/pdf/ERI2000-29.pdf
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    References listed on IDEAS

    as
    1. Amitrajeet A. Batabyal, 1996. "Game models of environmental policy in an open economy," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 30(2), pages 185-200.
    2. Karp, Larry & Newbery, David M., 1993. "Intertemporal consistency issues in depletable resources," Handbook of Natural Resource and Energy Economics,in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 19, pages 881-931 Elsevier.
    3. Mussa, Michael, 1978. "Dynamic Adjustment in the Heckscher-Ohlin-Samuelson Model," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 775-791, October.
    4. Amitrajeet A. Batabyal, 2008. "Environmental Policy In Developing Countries: A Dynamic Analysis," World Scientific Book Chapters,in: Dynamic And Stochastic Approaches To The Environment And Economic Development, chapter 9, pages 145-164 World Scientific Publishing Co. Pte. Ltd..
    5. Amitrajeet A. Batabyal, 1993. "Should Large Developing Countries Pursue Environmental Policy Unilaterally?," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 28(2), pages 191-202, July.
    6. Batabyal, Amitrajeet A., 1997. "Developing countries and environmental protection: the effects of budget balance and pollution ceiling constraints," Journal of Development Economics, Elsevier, vol. 54(2), pages 285-305, December.
    7. Amitrajeet Batabyal, 1994. "On the possibility of attaining environmental and trade objectives simultaneously," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(6), pages 545-553, December.
    8. Karp, Larry & Paul, Thierry, 1994. "Phasing In and Phasing Out Protectionism with Costly Adjustment of Labour," Economic Journal, Royal Economic Society, vol. 104(427), pages 1379-1392, November.
    9. Batabyal, Amitrajeet A., 1994. "An open economy model of the effects of unilateral environmental policy by a large developing country," Ecological Economics, Elsevier, vol. 10(3), pages 221-232, August.
    10. Christainsen, G.B. & Tietenberg, T.H., 1985. "Distributional and macroeconomic aspects of environmental policy," Handbook of Natural Resource and Energy Economics,in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 1, chapter 9, pages 345-393 Elsevier.
    11. J N Lekakis, 1991. "Employment effects of environmental policies in Greece," Environment and Planning A, Pion Ltd, London, vol. 23(11), pages 1627-1637, November.
    12. Mehmet, Ozay, 1995. "Employment creation and green development strategy," Ecological Economics, Elsevier, vol. 15(1), pages 11-19, October.
    13. Amitrajeet Batabyal, 1999. "Developing Countries and Environmental Protection: Contract Design in Perfectly Correlated Environments," Open Economies Review, Springer, vol. 10(3), pages 305-323, July.
    14. Shane Bonetti & Felix FitzRoy, 1999. "Environmental Tax Reform and Government Expenditure," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 13(3), pages 289-308, April.
    15. Amitrajeet A. Batabyal & Qing Xu, 2001. "Price competition, pollution, and environmental policy in an open economy," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 35(1), pages 59-79.
    16. Amitrajeet A. Batabyal, 1998. "Games governments play: An analysis of national environmental policy in an open economy," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 32(2), pages 237-251.
    17. J N Lekakis, 1991. "Employment Effects of Environmental Policies in Greece," Environment and Planning A, , vol. 23(11), pages 1627-1637, November.
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    Citations

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    Cited by:

    1. Marc, GERMAIN, 2005. "Impacts d’une politique de dépollution dans un modèle à la Heckscher-Ohlin dynamique," Discussion Papers (ECON - Département des Sciences Economiques) 2005010, Université catholique de Louvain, Département des Sciences Economiques.
    2. repec:ebl:ecbull:v:15:y:2007:i:9:p:1-10 is not listed on IDEAS
    3. Amitrajeet A. Batabyal, 2008. "Public Versus Personal Welfare: An Aspect Of Environmental Policymaking In Developing Countries," World Scientific Book Chapters,in: Dynamic And Stochastic Approaches To The Environment And Economic Development, chapter 13, pages 227-239 World Scientific Publishing Co. Pte. Ltd..
    4. Chen, Li-Ju & Lu, Lee-Jung & Tai, Meng-Yi & Hu, Shih-Wen & Wang, Vey, 2014. "Energy structure, energy policy, and economic sustainable development," International Review of Economics & Finance, Elsevier, vol. 34(C), pages 203-210.
    5. Adile TAMGUICHT, 2007. "Public versus personal welfare: an aspect of environmental policymaking in developing countries," Economics Bulletin, AccessEcon, vol. 15(9), pages 1-10.

    More about this item

    Keywords

    commitment; developing country; environmental policy; export subsidy;

    JEL classification:

    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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