Globalization, Cross-Border Pollution and Welfare
Athens University of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute)
Southern Illinois University Carbondale - Department of Economics
Michael S. Michael
University of Cyprus - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)
CESifo Working Paper No. 1479
We construct a two-good general equilibrium model of international trade for two small open economies where pollution from production is transmitted across borders. Governments in both countries impose emission taxes non-cooperatively. Within this framework, we examine the effect of trade liberalization and of changes in the perception of cross-border pollution on Nash emission taxes, emission levels, and welfare.
Number of Pages in PDF File: 27
Keywords: cross-border pollution, emission taxes, terms of trade, globalization, welfare
JEL Classification: Q28, H23
Date posted: July 19, 2005
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