Environmental Dumping and International Unionized Oligopolies

15 Pages Posted: 28 Oct 2009

See all articles by Jie Ma

Jie Ma

University of International Business and Economics (UIBE) - School of International Trade and Economics

Qi Duan

Peking University

Date Written: October 26, 2009

Abstract

This paper studies whether environmental dumping is a robust strategic environmental policy toward international unionized oligopolies. We introduce trade unions to Barrett (1994) model and show that: (i) When firms compete as Cournot competitors, governments engage in environmental dumping policies; and the extent to which optimal environmental taxes deviate from Pigouvian taxes is greater than in the case where there do not exist trade unions. (ii) When firms compete as Bertrand competitors, optimal environmental policies are determined by the interaction between trade unions’ bargaining strength and the degree of product differentiation. If trade unions’ bargaining strength is sufficient; or given trade unions’ bargaining strength, if the degree of product differentiation is sufficient, governments engage in environmental dumping policies. (iii) These imply that environmental dumping could be a robust strategic environmental policy toward international unionized oligopolies.

Keywords: environmental dumping, International unionized oligopolies

JEL Classification: F12, F18, H21, J51

Suggested Citation

Ma, Jie and Duan, Qi, Environmental Dumping and International Unionized Oligopolies (October 26, 2009). Available at SSRN: https://ssrn.com/abstract=1494877 or http://dx.doi.org/10.2139/ssrn.1494877

Jie Ma (Contact Author)

University of International Business and Economics (UIBE) - School of International Trade and Economics ( email )

No. 10 Huixin Dongjie
Chaoyang District
Beijing, 100029
China

Qi Duan

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

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