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Environmental Policy And Trade Liberalization: The Case Of Transboundary Pollution From Consumption

Author

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  • Kenji Fujiwara

    (Kwansei Gakuin University)

Abstract

This paper develops a reciprocal market model of international duopoly with transboundary pollution from consumption to examine the effects of bilateral tariff reductions on the equilibrium pollution tax and welfare. We show that tariff reductions induce each country to raise an emission tax and that trade liberalization is welfare-improving if the parameter of pollution damages is suciently large. These results are in contrast to the case of production-generated pollution and we seek the reason for this contrast.

Suggested Citation

  • Kenji Fujiwara, 2010. "Environmental Policy And Trade Liberalization: The Case Of Transboundary Pollution From Consumption," Discussion Paper Series 61, School of Economics, Kwansei Gakuin University, revised Nov 2010.
    • Handle: RePEc:kgu:wpaper:61
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    File URL: http://192.218.163.163/RePEc/pdf/kgdp61.pdf
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    Cited by:

    1. Chen, Xudong & Huang, Bihong, 2016. "Club membership and transboundary pollution: Evidence from the European Union enlargement," Energy Economics, Elsevier, vol. 53(C), pages 230-237.
    2. Chen Liang & Garcia-Medina Cecilia & Wan Rui, 2022. "Trade Liberalization, Consumption Shifting and Pollution: Evidence from Mexico's Used Vehicle Imports," Working Papers 2022-02, Banco de México.

    More about this item

    Keywords

    consumption-generated pollution; tariff reduction; emission tax; international duopoly.;
    All these keywords.

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