Piecemeal Reform of Trade and Environmental Policy When Consumption Also Pollutes

Mark R. Metcalfe, John C. Beghin

Research output: Contribution to journalArticlepeer-review

Abstract

We incorporate endogenous (price-responsive) consumption pollution into a dual trade model to assess welfare effects of coordinated trade and environmental piecemeal reform in a small, open and distorted economy. Pollution is generated by production and consumption. Producers control the level of pollution and face incentives to abate both types of pollution. We identify sufficient conditions for welfare-improving reforms of trade and environmental policies. An additional domestic environmental policy instrument must be imposed on exportables because of their supply response to foreign environmental taxes.

Original languageEnglish (US)
Pages (from-to)2282-2287
Number of pages6
JournalEconomics Bulletin
Volume35
Issue number4
StatePublished - 2015
Externally publishedYes

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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