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Consumption Externalities, Product Quality, and the Role of National Treatment

Author

Listed:
  • Paul Missios

    (Department of Economics, Ryerson University, Toronto, Canada)

  • Ida Ferrara

    (DEpartment of Economics, York University, Toronto, Canada)

  • Halis Murat Yildiz

    (Department of Economics, Ryerson University, Toronto, Canada)

Abstract

In Article III of the WTO, National Treatment limits domestic policy in an e¤ort to curtail protectionist discrimination against foreign products. We examine National Treatment when goods are vertically di¤erentiated and generate consumption external- ities in two interdependent product markets, comparing quantity and price equilibria under Article III with those prevailing in a world in which Article III does not apply. While one may expect that high externalities would lead to a greater need for discrim- inatory policies, we show this is often not the case and, furthermore, that National Treatment can lead to a cleaner world environment.

Suggested Citation

  • Paul Missios & Ida Ferrara & Halis Murat Yildiz, 2015. "Consumption Externalities, Product Quality, and the Role of National Treatment," Working Papers 048, Toronto Metropolitan University, Department of Economics.
    • Handle: RePEc:rye:wpaper:wp048
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    National Treatment; non-discrimination; environmental damages; consumption externalities; environmental policy; domestic policy; WTO.;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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