Environmental Regulation and Trade Openness in the Presence of Private Mitigation

34 Pages Posted: 18 Aug 2008 Last revised: 5 Sep 2010

See all articles by Louis Hotte

Louis Hotte

University of Ottawa

Stanley L. Winer

Carleton University - School of Public Policy and Administration; Carleton University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: August 31, 2010

Abstract

Acknowledging the differential ability of individuals to privately mitigate the consequences of pollution is essential for an understanding of demands for regulation of the environment and of trade in dirty goods, and for analysis of the implications of these demands for equilibrium policy choices. In a small open economy with exogenous policy, we first explain how private mitigation results in an unequal distribution of the health consequences of pollution in a manner consistent with epidemiologic studies, and consequently how the benefits and costs of trade in dirty goods interact with choices concerning private mitigation to polarize the interests of citizens concerning environmental stringency. The economy is then embedded in a broader political economy setting, and simulated to investigate the role of private mitigation in the determination of policy choices. We show that when citizens can effectively choose between costly collective and costly private alternatives for pollution control, the same polarization of interests underlies equilibrium policy choices concerning environmental regulation and trade openness in democratic and autocratic regimes.

Keywords: Environmental regulation, Private mitigation, Trade; Dirty Goods, Individual Welfare, Health, Democracy, Representation Theorem

JEL Classification: D7, F18, Q56

Suggested Citation

Hotte, Louis and Winer, Stanley L., Environmental Regulation and Trade Openness in the Presence of Private Mitigation (August 31, 2010). Available at SSRN: https://ssrn.com/abstract=1231422 or http://dx.doi.org/10.2139/ssrn.1231422

Louis Hotte

University of Ottawa ( email )

Department of Economics
55 Laurier E.
Ottawa, Ontario K1N 6N5
Canada
+161 356 25800 1692 (Phone)
+161 356 25999 (Fax)

HOME PAGE: http://aix1.uottawa.ca/~lhott3/

Stanley L. Winer (Contact Author)

Carleton University - School of Public Policy and Administration ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S 5B6
Canada
613-520-2600 x2630 (Phone)
613-520-2551 (Fax)

HOME PAGE: http://www.carleton.ca/winer

Carleton University - Department of Economics ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S 5B6
Canada
613-520-2600 ex.2630 (Phone)
613-520-2551 (Fax)

HOME PAGE: http://www.carleton.ca/winer

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
44
Abstract Views
568
PlumX Metrics