Political Institutions and the Design of Environmental Policy in a Federal System with Asymmetric Information

Fondazione Eni Enrico Mattei Working Paper No. 8.98

31 Pages Posted: 17 Sep 1998

See all articles by Alistair Ulph

Alistair Ulph

The University of Manchester - Faculty of Humanities

Date Written: January 1998

Abstract

Policy debates on trade and the environment frequently refer to a need for countries linked by trade to co-ordinate, or even harmonise, their purely domestic environmental policies. Underlying this argument is a concern that national governments will not fully internalise environmental externalities. Conventional trade models suggest this concern is unwarranted and harmonisation may be damaging. In this paper I consider two possible bases for this concern - strategic trade and political economy considerations - and assess the implications for the design of policy and political institutions to achieve co-ordination. A model which links these two factors suggests a possible rationale for harmonisation of environmental policies, even when countries differ significantly with respect to environmental damage costs.

JEL Classification: F1, H7, Q2

Suggested Citation

Ulph, Alistair M., Political Institutions and the Design of Environmental Policy in a Federal System with Asymmetric Information (January 1998). Fondazione Eni Enrico Mattei Working Paper No. 8.98, Available at SSRN: https://ssrn.com/abstract=122134 or http://dx.doi.org/10.2139/ssrn.122134

Alistair M. Ulph (Contact Author)

The University of Manchester - Faculty of Humanities ( email )

Manchester, M13 9PL
United Kingdom

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