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Coordinating Environmental and Trade Policy to Protect the Environment: A Pedagogical Approach

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  • Hultberg, Patrik T.
  • Udayanganie, Darshana

Abstract

Establishing appropriate environmental and trade policies is an important issue in today’s globalized economy, and yet there is no comprehensive analysis in most environmental economics and international trade undergraduate textbooks of how such policies are interrelated. The purpose of this article is to provide a straightforward framework for teaching students how environmental and trade policies are indeed interconnected, utilizing the standard tools of intermediate microeconomics. Focusing on a single competitive market and (nonstrategic) welfare maximizing government, optimal environmental and trade policies are derived and explored. The framework is used to address several circumstances, including negative production and consumption externalities, small and large countries, and transboundary pollution.

Suggested Citation

  • Hultberg, Patrik T. & Udayanganie, Darshana, 2022. "Coordinating Environmental and Trade Policy to Protect the Environment: A Pedagogical Approach," Applied Economics Teaching Resources (AETR), Agricultural and Applied Economics Association, vol. 4(4), September.
    • Handle: RePEc:ags:aaeatr:324806
    DOI: 10.22004/ag.econ.324806
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    References listed on IDEAS

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    1. Lynne Y. Lewis, 2011. "A Virtual Field Trip to the Real World of Cap and Trade: Environmental Economics and the EPA SO 2 Allowance Auction," The Journal of Economic Education, Taylor & Francis Journals, vol. 42(4), pages 354-365, October.
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    3. Daniel C. Esty, 2001. "Bridging the Trade-Environment Divide," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 113-130, Summer.
    4. St�phanie Monjon & Philippe Quirion, 2011. "A border adjustment for the EU ETS: reconciling WTO rules and capacity to tackle carbon leakage," Climate Policy, Taylor & Francis Journals, vol. 11(5), pages 1212-1225, September.
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    6. Britten-Jones, Mark & Nettle, Richard S & Anderson, Kym, 1987. "On Optimal Second-Best Trade Intervention in the Presence of a Domestic Divergence," Australian Economic Papers, Wiley Blackwell, vol. 26(49), pages 332-336, December.
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    8. Daniel Esty, 1994. "Greening the GATT: Trade, Environment, and the Future," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 40, April.
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    Cited by:

    1. Jayson Beckman & Maros Ivanic & Jeremy Jelliffe & Shawn Arita, 2022. "Adopt or not adopt? Mirror clauses and the European Green Deal," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(4), pages 2014-2033, December.

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