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Intra-industry Trade Liberalization and the Environment

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  • Michael Benarroch
  • James Gaisford

Abstract

type="main"> This paper examines how trade liberalization affects national and global pollution in a multi-country model incorporating monopolistic competition and intra-industry trade as well as inter-industry trade. Each country produces skill-intensive differentiated goods and labor-intensive goods. Pollution is a by-product of production but pollution abatement can be undertaken. Regardless of country characteristics, if the differentiated-good sector is sufficiently cleaner (dirtier) then, without any change in environmental taxes, a multilateral reduction in import protection accorded to the differentiated good or to both goods typically leads to a decline (rise) in pollution in all countries. Pollution havens tend not to arise.

Suggested Citation

  • Michael Benarroch & James Gaisford, 2014. "Intra-industry Trade Liberalization and the Environment," Review of International Economics, Wiley Blackwell, vol. 22(5), pages 886-904, November.
    • Handle: RePEc:bla:reviec:v:22:y:2014:i:5:p:886-904
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    References listed on IDEAS

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