Strategic environmental policy under free trade with transboundary pollution

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dc.creatorLapan, Harvey E.
dc.creatorSikdar, Shiva
dc.date2017-04-01T15:35:12Z
dc.date.accessioned2026-07-09T05:07:05Z
dc.descriptionWe analyze the effects of trade liberalization on environmental policies in a strategic setting when there is transboundary pollution. Trade liberalization can result in a race to the bottom in environmental taxes, which makes both countries worse. This is not due to the terms of trade motive, but rather the incentive, in a strategic setting, to reduce the incidence of transboundary pollution. With command and control policies (emission quotas), countries are unable to influence foreign emissions by strategic choice of domestic policy; hence, there is no race to the bottom. However, with internationally tradable quotas, unless pollution is a pure global public bad, there is a race to the bottom in environmental policy. Under free trade, internationally nontradable quotas result in the lowest pollution level and strictly welfare- dominate taxes. The ordering of internationally tradable quotas and pollution taxes depends, among other things, on the degree of international pollution spillovers
dc.identifierdoi:10.22004/ag.econ.59160
dc.identifierhttps://ageconsearch.umn.edu/record/59160/files/Sikdar_%20Lapan.pdf
dc.identifierhttp://ageconsearch.umn.edu/record/59160
dc.identifier.urihttp://hdl.handle.net/123456789/559231
dc.languageeng
dc.publisher
dc.sourcehttp://ageconsearch.umn.edu/record/59160
dc.titleStrategic environmental policy under free trade with transboundary pollution
dc.typeText

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