Working Paper : 1810


Authors Pantelaiou, I., Hatzipanayotou, P., Konstantinou, P. and Xepapadeas, A.
Title Can Cleaner Environment Promote International Trade? Environmental Policies as Export Promoting Mechanisms
Abstract We develop an international duopoly model where the firms export their output to a world-market. Production uses a depletable resource, and it generates pollution which affects negatively households welfare. Governments control pollution using (i) an emission tax, the revenue from which finances public pollution abatement, (ii) a revenue-recycling tax, refunded to the emitting firm contingent on reducing the cost of private pollution abatement, and (iii) an environmentally related standard. We evaluate them as (i) export promoting Non-Tariff Measures (NTMs) measuers, and (ii) resource conserving/depleting and welfare enhancing policy instruments. Our results indicate that, by and large (i) public pollution abatement works as an export-promoting but resource depleting mechanism, which under certain conditions can enhance welfare; (ii) revenue recycling works as an export-contracting but resource preserving mechanism, and (iii) environmental standards relative to public abatement work as an export-contracting but resource preserving mechanism, but relative to revenue recycling work in the opposite direction.
Creation Date 2018-02-00
Keywords Emission taxation, Public Pollution Abatement, Recycling tax revenues, Environmental Related Standards, International Trade.
Classification JEL F18, H23, Q58
File Environmental.Policies.as.Export.Promoting.Mechanisms.pdf (339744 bytes)
File-Function First version

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