Reforms of Environmental Policies in the Presence of Cross-Border Pollution and Two-Stage-Clean-Up

27 Pages Posted: 30 Jan 2002

See all articles by Panos Hatzipanayotou

Panos Hatzipanayotou

Athens University of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute)

Sajal Lahiri

Southern Illinois University Carbondale - Department of Economics

Michael S. Michael

University of Cyprus - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: January 2002

Abstract

We construct a two-country model where pollution from production is transmitted across borders. Pollution abatement is undertaken sequentially by private producers and the public sector. We characterize the Nash optimal levels of the policy instruments in the two countries: emission taxes and funds allocated for public abatement activities. We examine the implications of a number of multilateral policy reforms. One of our findings is that the magnitude of the beneficial effect of a reform depends on the scope of the reform, and if it is restricted to a subset of policy instruments, then the efficacy of environmental policy reform can be greatly undermined.

Keywords: Cross-border Pollution, Private Pollution Abatement, Public Pollution Abatement, Multilateral Policy Reform

Suggested Citation

Hatzipanayotou (Xatzipanagiotou), Panagiotis (Panos) and Lahiri, Sajal and Michael, Michael S., Reforms of Environmental Policies in the Presence of Cross-Border Pollution and Two-Stage-Clean-Up (January 2002). CESifo Working Paper Series No. 638. Available at SSRN: https://ssrn.com/abstract=298026

Panagiotis (Panos) Hatzipanayotou (Xatzipanagiotou) (Contact Author)

Athens University of Economics and Business ( email )

76 Patission Street
Athens, 104 34
Greece

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Sajal Lahiri

Southern Illinois University Carbondale - Department of Economics ( email )

MC 415
1000 Faner Drive
Carbondale, IL 62901
United States

Michael S. Michael

University of Cyprus - Department of Economics ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus
357-22892433 (Phone)
357-22892432 (Fax)

HOME PAGE: http://www.econ.ucy.ac.cy/staff/michael.htm

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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