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Environmental quality and the gains from trade

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  • Siebert, Horst

Abstract

The paper analyzes the trade‐off between environmental quality and the gains from trade. For a world with pollutants as a joint product of output it is shown that gains from trade by exporting a pollution‐intensively produced commodity are accompanied by a loss of environmental quality and that improving environmental quality will adversely affect the gains from trade. The paper analyzes with a two sector model which adjustment processes occur, if a country untertakes environmental policy. The results are explained diagrammatically. A condition is specified for a positive change in welfare from environmental policy taking into consideration the reduction in the gains from trade. Finally, the paper suggests that in an open economy emission taxes have to be set according to the same rule as in a closed economy, namely in the optimum the emission tax must equal marginal environmental damage prevented.
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Suggested Citation

  • Siebert, Horst, 1977. "Environmental quality and the gains from trade," Open Access Publications from Kiel Institute for the World Economy 3530, Kiel Institute for the World Economy (IfW Kiel).
  • Handle: RePEc:zbw:ifwkie:3530
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    References listed on IDEAS

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    1. Horst Siebert, 1974. "Environmental protection and international specialization," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 110(3), pages 494-508, September.
    2. Siebert, Horst, 1974. "Comparative advantage and environmental policy: A note," Open Access Publications from Kiel Institute for the World Economy 3516, Kiel Institute for the World Economy (IfW Kiel).
    3. Pethig, Rudiger, 1976. "Pollution, welfare, and environmental policy in the theory of Comparative Advantage," Journal of Environmental Economics and Management, Elsevier, vol. 2(3), pages 160-169, February.
    4. James R. MARKUSEN, 2021. "International Externalities And Optimal Tax Structures," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 16, pages 341-355, World Scientific Publishing Co. Pte. Ltd..
    5. Siebert, Horst, 1977. "Die Grundprobleme des Umweltschutzes: Eine wirtschaftstheoretische Analyse," Open Access Publications from Kiel Institute for the World Economy 3551, Kiel Institute for the World Economy (IfW Kiel).
    6. Ingo Walter, 1974. "International trade and resource diversion: The case of environmental management," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 110(3), pages 482-493, September.
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