environmental policy intra industry trade and transfrontier pollution the paper discusses effects of domestic environmental policy on foreignemissions and on transboundary pollution we use a dixit stiglitz typemodel of monopolistic competition with an endogenous number of firms production generates environmental externalities which spill over to theother country it is shown that environmental policy has an impact onmarket structure at home and abroad these market structure effectsinduce changes in emissions abroad in contrast to what has been derivedin earlier contributions it turns out to be possible that tighterenvironmental standards at home lead to less emissions abroad the paperderives these results and provides the economic intuition behind them finally conditions for optimal environmental policies are derived

intra industry trade between the industrial countries and the developing world abstract intra industry trade in manufactures between the industrial countries and the developing world is far from negligible and it cannot be explained away by the level of aggregation used our results indicate a complementarity between the heckscher ohlin family of explanations of trade between countries and the observed intra industry trade in manufactures between the industrial countries and the developing world further both natural and artificial barriers to trade seems to encourage such intra industry trade but this should provide little consolation to protection lobbies as the cost reductions implied by the intra industry trade adjustments will have high if they were to compensate for the welfare losses resulting from barriers to trade

wage vacancy contracts and coordination frictions abstract we consider a directed search model with risk averse workers and risk neutral entrepreneurs who can set up firms that post wage vacancy contracts i e contracts where firms can make payments to more than one applicant and where the payments can be different for each applicant and be contingent on the number of applicants we establish that the type of contracts the literature focuses on are not offered if firms can post wage vacancy contracts we show that there exists an equilibrium satisfying a monotonic expected utility property which is efficient furthermore we investigate the role of wage vacancy contracts on welfare and competition

directed search and the bertrand paradox i study a directed search model of oligopolistic competition extended to incorporate general capacity constraints congestion effects and pricing based on ex post demand in the presence of any one of these ingredients the bertrand paradox fails to hold hence despite the emphasis that has been placed by the literature on sellers capacity constraints as a resolution to the paradox the existence of such constraints is only a subcase of a general class of environments where the paradox fails specifically bertrand s paradox will not arise whenever the buyers expected utility from visiting a seller is decreasing in that seller s realized demand

on the effects of unilateral environmental policy on offshoring in multi stage production processes in the last decades supply chains emerged that stretch across many countries this has been explained with decreasing trade and communication costs we extend the literature by analyzing if and how unilateral environmental regulation induces offshoring to unregulated jurisdictions we first apply an analytical partial equilibrium model of a two stage production process that can be distributed between two countries and investigate unilateral emission pricing and its supplementation with border carbon taxes to get a more comprehensive picture we subsequently apply a computable general equilibrium model that includes a better representation of international supply chains we find heterogeneous but mostly positive effects of a unilateral carbon emission reduction by the european union on the degree of vertical specialisation of european industries and explain these differences by heterogeneity in the emission intensity and pre policy vertical specialisation of sectors border taxes are successful in protecting upstream industries but with negative side effects for downstream industries

marketing margins and the welfare analysis of food price shocks abstract following the surge in world food prices of 2007 2008 there has been a revival of short run household welfare analysis that seeks to understand whether food price increases are beneficial or detrimental for households for a number of reasons including lack of data in some instances the short run analytical approach has embedded an assumption of equal percentage price changes for consumers and producers this assumption implies that food marketing costs change by the same percentage because an x percent change in both farm prices and consumer prices implies that there must also be an x percent change in their difference but this paper shows that most marketing costs are fixed not proportional and further that assuming proportional marketing costs leads to a bias towards finding negative impacts of higher food prices the magnitude of the bias is shown to be greater than that from failing to incorporate supply and demand responses to price changes and can be substantial relative to the effect estimated without incorporating the bias in addition the bias is not necessarily uniform across income classes thus failure to explicitly consider marketing margins has the potential to reverse the relative magnitudes of the impact on rich and poor

efficient climate policy in the presence of free riders abstract if all countries participate in a climate agreement policies affecting the supply of fossil fuels have identical economic consequences as policies affecting the demand of fossil fuels this is no longer true when there is limited participation in an international agreement in the paper it is assumed that a group of countries commit themselves to cooperating while the remaining countries act independently and in pure self interest the paper compares supply and demand policies in this context and demonstrates that policies which affect only demand or only supply of carbon generally are inferior to policies affecting both demand and supply of carbon the optimal mix of supply and demand policies is derived in the paper with particular emphasis on carbon taxes an important result is that if the marginal environmental costs of total emissions are sufficiently high in the cooperating countries then both production and consumption of carbon should be taxed at a positive rate if on the other hand the marginal environmental costs of total emissions are sufficiently low it may be optimal to subsidize production or consumption in this case production should be subsidized if the cooperating countries are net importers of carbon while consumption should be subsidized if the cooperating countries are net exporters of carbon another important conclusion of the paper is that the cooperating countries should try to induce the non cooperating countries through appropriate transfers to tax consumption and production of carbon at the same rate as in the cooperating countries

environmental and resource economics a canadian retrospective the paper reviews research contributions to environmental and resource economics by scholars in canada we focus mainly on work from the past 25 years but also highlight earlier pathbreaking work we begin by looking at broad trends in research both internationally and within canada we then review canadian contributions to various topics in the field canadians have played a leading role in the development of the field especially in resource economics international environmental economics and the valuation of environmental amenities

a global assessment of the economic effects of export taxes trade negotiations have been largely driven by mercantilist interests seeing imports as a threat and exports as opportunities therefore policy makers and negotiators have focused in making concessions aimed to trade market access i e reductions in import duties and in ensuring fair competitions i e putting disciplines in production and export subsidies therefore even if export taxes and export restrictions are used by many countries in 2004 piermartini noted that approximately one third of world trade organization wto members impose export duties they have been a much lower source of concerns for policy makers trade negotiators and economists however the effects of export taxes are various the terms of trade effect market power of key suppliers consumer price e g food security or intermediate input price industrial policy in favor of processed goods reduction and or stabilization government revenue and income redistribution and this versatility has made them popular in many countries even if they create serious negative externalities for their trade partners the recent years have been marked by a renewal of interests from the trade community on this issue the 2007 2008 food price crisis bouet and laborde 2010 anderson and martin 2011 has shed light on their dangerous consequences on food security in period of price hikes and export restrictions on key inputs such as rare earths has led to trade dispute between the european union and china this paper using a new detailed dataset aims to address the impact of export restrictions on global welfare the mirage computable general equilibrium cge model which is multisectoral multiregion and dynamic is used to investigate how global removal of export taxes affects global trade and real income of major trading blocks the limited analysis of export taxation under a global and multisectoral framework is largely due to the lack of data in recent years the macmaphs6 and g

toward a new conception of the environment competitiveness relationship accepting a fixed trade off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress studies finding high environmental compliance costs have traditionally focused on static cost impacts ignoring any offsetting productivity benefits from innovation they typically overestimated compliance costs neglected innovation offsets and disregarded the affected industry s initial competitiveness rather than simply adding to cost properly crafted environmental standards can trigger innovation offsets allowing companies to improve their resource productivity shifting the debate from pollution control to pollution prevention was a step forward it is now necessary to make the next step and focus on resource productivity

on the measurement of product variety in trade product variety plays an important role in the theoretical work on monopolistic competition and trade and recent empirical work has begun to quantify this for aggregate and disaggregate import demands the authors discuss the measurement of product variety in trade using a broad cross section of industrial and developing countries and disaggregating across sectors the authors calculate the export variety of countries in their sales to the united states and relate the export variety indexes to country productivities they confirm that countries with greater product variety in exports also have higher productivity this may be due to their development of and access to these products

persistent wage dispersion and involuntary unemployment it is costly for firms offers to workers to be turned down both because firms must make additional offers and making offers is costly and because capital is underused or unused provided that workers apply to at least two firms for jobs there will be wage dispersion in equilibrium and some workers will randomly fail to receive any wage offers firms in the same industry with access to the same technology may nevertheless choose different levels of capital intensity firms using capital intensive technologies will pay higher wages

how road improvement reduces poverty the case of laos a general equilibrium modeling approach is used to study the effect that rural road improvement has on poverty incidence in laos household survey data are used to distinguish three categories of rural villages according to their road access i no vehicular access ii dry season only access and iii all weather access a general equilibrium model of the lao economy is then used to simulate first the effect of upgrading category i to category ii roads and second category ii to category iii roads the former has a larger poverty reducing effect but is also more costly

the combination of gravity and welfare approaches for evaluating nontariff measures this article explores the link between gravity and welfare frameworks for measuring the impact of nontariff measures first an analytical approach suggests how to combine a gravity equation with a partial equilibrium model to determine the welfare impact of nontariff measures second an empirical application focuses on the effects of a standard that caps antibiotic residues in crustaceans in the united states the european union canada and japan while the econometric estimation of the gravity equation reports a negative impact on imports welfare evaluations show that in most cases a stricter standard leads to an increase in both domestic and international welfare

second best agricultural policy abstract since full economic liberalization is not generally feasible getting the prices of selected agricultural markets right involves optimal price distortions a methodology is developed for calculating the second best output price in a particular market by incorporating externalities government revenue constraints and distortions in other markets into the marginal social cost and benefit schedules for that market in the illustrative application to thailand tax friction consumption externalities and the optimal tariff argument are seen to support an export tax on rice even though import tariffs already discriminate against agricultural exports

are there limits to growth a simple theoretical model of pollution is developed that generates an inverted u shape relationship between per capita income and environmental quality this model is then used to study long run growth the same inverted u shape is shown to appear in time series and the prospects for sustained growth are shown to hinge on whether increasingly strict environmental regulation is compatible with a constant rate of return on capital implementation is also studied tax and voucher schemes are shown to have an advantage over direct regulation because they provide the correct incentives for capital accumulation copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

pollution havens and industrial agglomeration abstract this paper examines the pollution haven hypothesis using a spatial economy model of two countries and two sectors the manufacturing sector generates cross border pollution which reduces cross sectoral productivity of agricultural goods and lowers local income we derive a demand reducing effect that discourages firms to move to the country with laxer environmental regulations in the absence of any comparative advantage our analysis also demonstrates that manufacturing agglomeration forces can alleviate the pollution haven effect a pollution haven may not arise if environmental regulation is slightly more stringent in the larger country

variety growth and world welfare economists since john richard hicks have known that one of the principal means if not the principal means through which countries benefit from international trade is by the expansion of varieties the seminal work of paul r krugman 1979 brought the study of varieties into sharp focus by presenting a simple generalequilibrium model in which countries gain from trade through the import of new varieties since then economists have been hampered in their ability to quantify the impact of new varieties on national welfare by the econometric and data hurdles that need to be surmounted in this paper we document some stylized facts about the growth in global varieties which suggest that there may have been substantial welfare gains through the import of new varieties moreover we calculate the impact of increased variety on import prices and find that conventional measures of import price inflation may be dramatically biased upward classical international trade theory postulates that the elimination of trade barriers improves welfare by reducing the wedge between domestic and import prices as well as the ensuing deadweight loss an entirely different reason for the gains from trade arises from models of monopolistic competition if consumers value variety and countries cannot produce all varieties due to a fixed cost in the production of each variety countries stand to gain from trade because it expands the set of available varieties in these models the gains hinge crucially on a number of parameters and variables the first is the elasticity of substitution among varieties if varieties are highly substitutable as might be true for varieties of gasoline then increasing the number of varieties is unlikely to have much of an effect on prices and welfare second quality variation across varieties may matter presumably most americans care more about having access to french red wine than to japanese red wine finally import quantities matter as ceteris paribus one cares more about variety growth in big sectors than in small sectors in broda and weinstein 2004 we carefully estimate the impact of increased variety in the united states over the period from 1972 to 2001 using the most disaggregated import data available we document that the number of varieties imported by the united states defined as the number of import categories multiplied by the average number of source countries for each category quadrupled about half of this increase was due to increases in the number of categories and half due to a doubling of the number of countries from which the united states imported each good measuring the impact of this increase on u s import prices and welfare is a complex process that we will only discuss briefly here essentially we used robert c feenstra s 1994 methodology to estimate 30 000 elasticities and then construct an aggregate price index that is robust to common changes in quality variation the arbitrary splitting of categories the introduction of new goods and a host of other data problems after reconstructing the u s import price index we found that the price of u s imports has been falling at a rate 1 2 percent per year faster than one would have thought without taking new varieties into account to get some sense of the enormity of this bias consider that the impact of quality adjustments on the consumer price index is estimated to be 0 6 percent per year using this adjusted import price index we estimate the impact of new imported varieties on broda research department federal reserve bank of new york 33 liberty street new york ny 10045 weinstein economics department columbia university 420 w 118th street new york ny 10027 and nber we thank joshua greenfield for excellent research assistance we thank robert feenstra and peter klenow for excellent comments 1 the extension of trade does not primarily imply more goods the variety of goods available is also increased with all the widening of life that that entails there can be little doubt that the main advantage that will accrue to those with whom our merchants are trading is a gain of precisely this kind this is a gain which quantitative economic history which works with index numbers of real income is ill fitted to measure or even to describe hicks 1969 p 56

can the terms of trade externality outweigh free riding the role of vertical linkages abstract this paper analyzes the impact of vertical linkages on the international effects of environmental policy with vertical linkages stricter environmental policy at home indirectly reduces pollution in the rest of the world this spillback effect can reinforce the free rider problem that arises under strategic interaction when pollution is transboundary a race to the bottom ensues despite the fact that vertical linkages make it easier for national regulators to export the costs of environmental policy via the terms of trade we also find that while trade liberalization can be good for the environment vertical linkages tend to increase global pollution

a trade related pollution trap for economies in transition evidence from china abstract this study argues that economic growth does not necessarily reverse the pollution haven behavior even if one economy shifts from the low income group to the high income one i e the economy in transition the economy in transition can become a convergence of trade related pollution then getting stuck in a pollution trap through investigating the case of china during 2003 2009 this study examines the features and causes of trade related pollution trap supported by the world input output database and the product specific statistics from china customs this study applies the input output analysis to trace the distribution of pollution embodied in china s foreign trade then it constructs a sector country year panel and applies the fixed effect model to examine causes of the pollution trap the results show that china s pollution terms of trade ptt with developing economies increases and exceeds one while the ptt with developed economies keeps larger than one it supports the feature of pollution trap the results also demonstrate that pollution trap is determined by the synergy of environmental regulation inter industry trade and intra industry trade 1 environmental regulations keep china from becoming pollution haven of developed economies rather than relocating pollution intensive production to other developing economies 2 the current intra industry trade of low value added products worsens china s environmental performance 3 the diluting advantage on labor and the accumulating advantage on capital keep china specializing in pollution intensive production overall the pollution trap may alert economies that applies the outward oriented growth model to prepare for sustainability transition our findings imply that going green rather than moving away is essential in response to trade environment effects more stringent regulation should improve the environmental performance of production and encourage the utilization of clean technology the increasing role of intra industry trade requires to upgrade the commodity structure towards one with higher added value

judging agricultural policies a survey this survey provides a structured picture of 40 years of literature which uses welfare economic tools to judge agricultural policy challenges and developments of normative agricultural policy analysis are discussed in an easily accessible graphical framework it is shown how the literature has gone from examining a very small discrete set of simple policies to a much broader often continuous set of policies that combine policy instruments simultaneously the importance of the pareto criterion used to explore the limits of how government can affect welfare is revealed moreover given the importance of the objective of income redistribution in agricultural policy agricultural economists have often departed from the purely efficiency oriented tradition in economics it is shown that they have tried to incorporate equity considerations by either adding these criteria as constraints to the social welfare function or directly incorporating these criteria in the functional form of the social welfare function

intra industry trade and strategic interaction theory and evidence abstract we conduct a theory based empirical study of intraindustry trade in homogeneous products we derive an oligopolistic model of intra industry trade which is an extension of the segmented market model of trade initially proposed by brander j a 1981 intra industry trade in identical commodities journal of international economics 11 1 14 the empirical implementations of the model are investigated in the context of the petrochemical industry our analysis employs a unique data set containing detailed product and location specific data on the petrochemical industries in germany and the united states allowing for different empirical specifications we find that cross product variations in bilateral intra industry trade of petrochemicals are well explained by the variables suggested by the theoretical model

welfare effects of an export tax thailand s rice premium an empirically based applied general equilibrium model is used to study the welfare and distributional effects of an export tax when the implementing country possesses some monopoly power in the world market a method is demonstrated through which a general equilibrium model can be used to find the optimal value of a tax or subsidy the approach makes it possible to conduct the welfare analysis of a particular intervention in an explicit second best context to study its income distributional implications and to explore the sensitivity of the results to variations in key behavioral parameters structural assumptions and the government s distributional objectives copyright 2001 oxford university press

the optimal export tax for a primary commodity in a vertical market the conventional formula for the optimal export tax derived from a partial equilibrium model that ignores importers welfare is extended to include the deadweight loss to the domestic economy associated with the tax applying the extended formula to the tax russia imposes on its exports of logs results suggest ignoring the marketing channel causes the optimal export tax for a primary commodity to be understated the degree of understatement increases as the supply of logs and processing marketing inputs become less price elastic and as buyer and seller power in the downstream lumber industry increases for plausible values of model parameters however the degree of understatement is modest less than 19

demand and supply factors in the determination of nie exports a simultaneous error correction model for hong kong this paper considers the issue of whether a small developing economy such as hong kong faces a perfectly elastic demand for its exports of manufactured goods we construct a simultaneous demand and supply system which is estimated using full information maximum likelihood methods and which allows us to clearly identify demand and supply factors in determining export volumes and prices our empirical findings differ from previous studies conducted with this data set in that they suggest that even a small dynamic newly industrialized economy such as hong kong may not face infinitely elastic demand for its manufactured goods we also advance some reasons to explain why the small country assumption may not be applicable in the case of most industrialized economies

directed search with multi vacancy firms abstract i construct a directed search model in which firms decide whether to enter a market and how many positions to create within this framework the number of firms and the size of each firm are determined endogenously wages play an allocative role in the matching process and the frictions inherent in this process derive from the equilibrium behavior of workers and firms i characterize the unique equilibrium comparative statics generate testable implications for cross sectional variation in matching efficiency as well as the dynamic behavior of vacancies and unemployment moreover allowing for ex ante heterogeneity across firms the model can easily and naturally generate the observed relationship between firm size wages profitability and hiring

environmental policy when market structure and plant locations are endogenous abstract a two region two firm model is developed in which firms choose the number and the regional locations of their plants both firms pollute and market structure is endogenous to environmental policy there are increasing returns at the plant level imperfect competition between the home and the foreign firm and transport costs between the two markets at critical levels of environmental policy variables small policy changes cause large discrete jumps in a region s pollution and welfare as a firm closes or opens a plant or shifts production to from a foreign branch plant the implications for optimal environmental policy differ significantly from those suggested by traditional pigouvian marginal analysis

intra industry trade in intermediate products pollution and internationally increasing returns this paper examines the relationship between intra industry trade in intermediate products pollution and increasing returns we develop a two country model in which production occurs in two stages final and intermediate good production intermediate goods are produced under monopolistic competition and final good production exhibits increasing returns with respect to the number of varieties of intermediates pollution occurs in the production of the final good when polluting intermediates are used we analyze the effects of international trade in intermediate products on pollution output and welfare under an endogenous tax scenario and with two types of pollution functions the results show that because of increasing returns international trade either leads to lower total pollution in each country or lower pollution per unit of output in at least one country in addition intra industry trade causes countries to import the environmental quality of their trading partners

world food prices and poverty incidence in a food exporting country a multihousehold general equilibrium analysis for thailand a multisectoral multihousehold general equilibrium model of the thai economy is used to analyze the implications of recent increases in international food prices higher food prices especially staple grains worsen poverty incidence in thailand despite the presence of large numbers of poor farmers many of whom benefit from higher prices the positive effect on the welfare of poor farmers is dominated by the negative effect on poor consumers of the recent price increases for rice sugar cassava maize soybeans urea and petroleum the increases in rice prices raise poverty incidence the most despite thailand being the world s largest rice exporter

agricultural land retirement and slippage lessons from an australian case study this paper uses a computable general equilibrium cge model to examine the economic implications of agricultural land retirement from wool production for conservation in australia employing an innovative specific factors characterization of production to generate short run and long run results we show that the potential welfare gains from land retirement can be significant however in several scenarios examined we find that slippage in agricultural production is significant resulting in reduced welfare our slippage results provide insights into the relationship between the potential causes of slippage and describe how a land retirement policy can be designed to minimize this effect jel c68 q24

is trade in permits good for the environment we analyze the impact of trade in emission permits on environmental policy when countries trade a differentiated good pollution is always higher with tradable permits as compared to the case where permits are not internationally tradable if pollution is a pure global public bad i e the marginal damage from transboundary pollution is the same as that from local pollution the permit price under trade equals the domestic marginal damage from own emissions if pollution is not a pure global public bad i e the marginal damage from transboundary pollution is less than that from local pollution trade results in a permit price lower than the domestic marginal damage from own emissions pollution is higher under trade relative to autarky regardless of the nature of transboundary pollution the permit price equivalent pollution tax is lower and pollution is higher with internationally tradable permits than with nontradable permits

modelling nie exports aggregation quantitative restrictions and choice of econometric methodology the current debate regarding the robustness of estimates of export demand and supply elasticities for nies is examined by modelling manufactured exports from korea the results suggest that normalisation of the export demand function for price rather than quantity is an important issue in estimating export demand functions of small countries and that estimates of export demand elasticities at high levels of aggregation are subject to potentially powerful biases when the aggregate consists of categories which are subject to quantitative restrictions if proper modelling procedures are followed it is likely that the small country assumption will find far more empirical support than it has hitherto