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Optimal Tariff Calculations in Tariff Games with Climate Change Considerations

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  • Yan Dong

    (Institute of World Economics and Politics)

  • John Whalley

Abstract

We discuss whether or not the introduction of climate change considerations into Nash tariff games increases or reduces post retaliation tariffs. We briefly discuss how climate change considerations can be introduced into computational trade models. We then calculate optimal tariffs in comparable conventional (no climate change considerations present) and with climate change trade models. Results show that compared to conventional trade models, adding climate change considerations reduces the level of optimal tariffs, but this only occurs when the damage effects involved are large.

Suggested Citation

  • Yan Dong & John Whalley, 2010. "Optimal Tariff Calculations in Tariff Games with Climate Change Considerations," Trade Working Papers 23039, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:tradew:23039
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    File URL: http://www.eaber.org/node/23039
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    References listed on IDEAS

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    1. Harry G. Johnson, 1953. "Optimum Tariffs and Retaliation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(2), pages 142-153.
    2. Kuga, Kiyoshi, 1973. "Tariff retaliation and policy equilibrium," Journal of International Economics, Elsevier, vol. 3(4), pages 351-366, November.
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    5. Markusen, James R & Wigle, Randall M, 1989. "Nash Equilibrium Tariffs for the United States and Canada: The Roles of Country Size, Scale Economies, and Capital Mobility," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 368-386, April.
    6. Whalley John & Yu Jun & Zhang Shunming, 2012. "Trade Retaliation in a Monetary-Trade Model," Global Economy Journal, De Gruyter, vol. 12(1), pages 1-29, March.
    7. Hamilton, Bob & Whalley, John, 1983. "Optimal tariff calculations in alternative trade models and some possible implications for current world trading arrangements," Journal of International Economics, Elsevier, vol. 15(3-4), pages 323-348, November.
    8. Cai, Yuezhou & Riezman, Raymond & Whalley, John, 2013. "International trade and the negotiability of global climate change agreements," Economic Modelling, Elsevier, vol. 33(C), pages 421-427.
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    Cited by:

    1. Shuai Chen & Jiameng Yang, 2023. "Environmental Pollution Liability Insurance Pricing and the Solvency of Insurance Companies in China: Based on the Black–Scholes Model," IJERPH, MDPI, vol. 20(2), pages 1-21, January.

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    More about this item

    Keywords

    Climate change; Nash tariff games; climate change trade models; trade models;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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