Low tariff on dirty goods—Environmental negligence or environmental concern?

Marjit, Sugata; Mukherjee, Arijit

Abstract

Shapiro (Quarterly Journal of Economics, 2021) conducts an in-depth empirical analysis to show that dirtier upstream goods face lower import tariffs than cleaner downstream goods. Inspired by that paper, we examine how the welfare maximizing tariffs on the final goods will differ depending on the dirtiness and the extent of cross border pollution. We show that countries concerned about controlling pollution but maximizing own welfare would be encouraged toward relatively unfettered import of dirtier final goods if pollution is mainly generated through domestic production. We discuss the implications of global welfare maximizing tariff protection, pollution taxes, and multiple tradable products.

Citation

Marjit, S., & Mukherjee, A. (2023). Low tariff on dirty goods—Environmental negligence or environmental concern?. Review of International Economics, 31(4), 1246-1270. https://doi.org/10.1111/roie.12662

• Journal Article Type: Article
• Acceptance Date: Feb 5, 2023
• Online Publication Date: Mar 8, 2023
• Publication Date: 2023-09
• Deposit Date: Feb 6, 2023
• Publicly Available Date: Mar 8, 2023
• Journal: Review of International Economics
• Print ISSN: 0965-7576
• Electronic ISSN: 1467-9396
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 31
• Issue: 4
• Article Number: 12662
• Pages: 1246-1270
• DOI: https://doi.org/10.1111/roie.12662
• Keywords: Pollution; Tariff; Welfare
• Public URL: https://nottingham-repository.worktribe.com/output/17071999
• Publisher URL: https://onlinelibrary.wiley.com/doi/10.1111/roie.12662