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Dynamic environmental policy in developing countries with a dual economy

  • D. Lee
  • A. Batabyal

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.

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Paper provided by Utah State University, Department of Economics in its series Working Papers with number 2000-29.

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Length: 30 pages
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Handle: RePEc:usu:wpaper:2000-29
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  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. Batabyal, Amitrajeet A., 1995. "Game Models of Environmental Policy in an Open Economy," Working Papers 9511, Utah State University, Department of Economics.
  6. 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.
  7. Amitrajeet A. Batabyal, 1998. "Games governments play: An analysis of national environmental policy in an open economy," The Annals of Regional Science, Springer, vol. 32(2), pages 237-251.
  8. 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.
  9. Amitrajeet A. Batabyal & Qing Xu, 2001. "Price competition, pollution, and environmental policy in an open economy," The Annals of Regional Science, Springer, vol. 35(1), pages 59-79.
  10. Shane Bonetti & Felix FitzRoy, 1999. "Environmental Tax Reform and Government Expenditure," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 13(3), pages 289-308, April.
  11. Mussa, Michael, 1978. "Dynamic Adjustment in the Heckscher-Ohlin-Samuelson Model," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 775-91, October.
  12. Karp, Larry & Paul, Thierry, 1993. "Phasing in and Phasing Out Protectionism with Costly Adjustment of Labour," CEPR Discussion Papers 856, C.E.P.R. Discussion Papers.
  13. Batabyal, Amitrajeet A, 1998. "Environmental Policy in Developing Countries: A Dynamic Analysis," Review of Development Economics, Wiley Blackwell, vol. 2(3), pages 293-304, October.
  14. Amitrajeet Batabyal, 1994. "On the possibility of attaining environmental and trade objectives simultaneously," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 4(6), pages 545-553, December.
  15. 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.
  16. Mehmet, Ozay, 1995. "Employment creation and green development strategy," Ecological Economics, Elsevier, vol. 15(1), pages 11-19, October.
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