Globalization, Cross-Border Pollution and Welfare
27 Pages Posted: 19 Jul 2005
Date Written: June 2005
We construct a two-good general equilibrium model of international trade for two small open economies where pollution from production is transmitted across borders. Governments in both countries impose emission taxes non-cooperatively. Within this framework, we examine the effect of trade liberalization and of changes in the perception of cross-border pollution on Nash emission taxes, emission levels, and welfare.
Keywords: cross-border pollution, emission taxes, terms of trade, globalization, welfare
JEL Classification: Q28, H23
Suggested Citation: Suggested Citation