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Domestic Effects of Environmental Policies with Transboundary Pollution

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  • Michel Cavagnac
  • Isabelle Péchoux

Abstract

We model environmental interaction among countries as a policy game where governments in each country use quotas or taxes as strategy variables. The environmental policy has a triple role to play: targeting domestic emissions, providing strategic advantages for domestic firms and targeting imported pollution. Using a multi-sector economic model, we show that, besides the well-known inefficiencies arising at the international level, the environmental policy may lead to purely domestic inefficiencies. JEL classification : F18 ; Q20 ; Q28.

Suggested Citation

  • Michel Cavagnac & Isabelle Péchoux, 2010. "Domestic Effects of Environmental Policies with Transboundary Pollution," Recherches économiques de Louvain, De Boeck Université, vol. 76(1), pages 113-134.
    • Handle: RePEc:cai:reldbu:rel_761_0113
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    More about this item

    Keywords

    environmental policy; transboundary pollution; multi-sector model;
    All these keywords.

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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