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Liberalizing trade in environmental goods and services

Dijkstra, Bouwe; Mathew, Anuj


Anuj Mathew


We examine the effects of trade liberalization in environmental goods in a model with one domestic downstream polluting firm and two upstream firms (one domestic, one foreign). The upstream firms offer their technologies to the downstream firm at a flat fee. The domestic government sets the emission tax rate after the outcome of R&D is known. The effect of liberalization on the domestic upstream firm's R&D incentive is ambiguous. Liberalization usually results in cleaner production, which allows the country to reach higher welfare. However this increase in welfare is typically achieved at the expense of the environment (a backfire effect).


Dijkstra, B., & Mathew, A. (2016). Liberalizing trade in environmental goods and services. Environmental Economics and Policy Studies, 18(4), 499-526.

Journal Article Type Article
Acceptance Date Aug 6, 2015
Online Publication Date Aug 25, 2015
Publication Date Oct 1, 2016
Deposit Date Jan 22, 2016
Publicly Available Date Jan 22, 2016
Journal Environmental Economics and Policy Studies
Print ISSN 1432-847X
Electronic ISSN 1867-383X
Publisher Springer Verlag
Peer Reviewed Peer Reviewed
Volume 18
Issue 4
Pages 499-526
Public URL
Publisher URL


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