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The Political Economy of Trade Liberalization and Environmental Policy

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  • Per G. Fredriksson

Abstract

A pressure group model where environmental and industry lobby groups offer political support in return for favorable pollution tax policies is used to explain and predict the equilibrium pollution tax in sectors protected by tariffs. The political economy effects of trade liberalization are investigated. The pollution tax is shown to decrease if the lobbying effort by the environmental lobby decreases more rapidly than by the industry lobby ceteris paribus. The level of political conflict falls with trade liberalization. Pollution may increase because of a reduction of the pollution tax, and tax revenues may fall simultaneously as pollution increases.

Suggested Citation

  • Per G. Fredriksson, 1999. "The Political Economy of Trade Liberalization and Environmental Policy," Southern Economic Journal, John Wiley & Sons, vol. 65(3), pages 513-525, January.
    • Handle: RePEc:wly:soecon:v:65:y:1999:i:3:p:513-525
    DOI: 10.1002/j.2325-8012.1999.tb00173.x
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    Cited by:

    1. Yan, Yan & Li, Yi, 2023. "Technology spillovers, strategic environmental policy, and foreign direct investment," Energy Economics, Elsevier, vol. 127(PA).
    2. Thanh Le & Erkan Yalcin, 2023. "Lobbying, political competition and the welfare effect of campaign contribution tax," Scottish Journal of Political Economy, Scottish Economic Society, vol. 70(2), pages 158-179, May.
    3. Hamaguchi, Yoshihiro, 2023. "Environmental tax evasion as a determinant of the Porter and pollution haven hypotheses in a corrupt political system," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 610-633.
    4. Bontems, Philippe & Cheikbossian, Guillaume & Hafidi, Houda, 2024. "Environmental Tax Competition and Welfare: The Good News about Lobbies," TSE Working Papers 24-1551, Toulouse School of Economics (TSE).
    5. Georges A. Tanguay & Paul Lanoie & Jérôme Moreau, 2001. "Environmental Policy, Public Interest and Political Market," Cahiers de recherche 01-01, HEC Montréal, Institut d'économie appliquée.
    6. Paul Lanoie & Jérôme Moreau & Georges A. Tanguay, 2001. "Environmental Policy, Public Interest and Political Market," CIRANO Working Papers 2001s-37, CIRANO.

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