Liberalizing trade in environmental goods and services

Dijkstra, Bouwe; Mathew, Anuj

Abstract

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).

Citation

Dijkstra, B., & Mathew, A. (2016). Liberalizing trade in environmental goods and services. Environmental Economics and Policy Studies, 18(4), 499-526. https://doi.org/10.1007/s10018-015-0121-6

• 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
• DOI: https://doi.org/10.1007/s10018-015-0121-6
• Public URL: https://nottingham-repository.worktribe.com/output/758497
• Publisher URL: http://link.springer.com/article/10.1007%2Fs10018-015-0121-6