reforms of environmental policies in the presence of cross border pollution and public private clean up we construct a two country model where pollution from production is transmitted across borders pollution abatement is undertaken by both private producers and the public sector we characterize 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 if it is restricted to a subset of policy instruments then the efficacy of environmental policy reform can be greatly undermined

welfare and trade effects of international environmental agreements we analyse the welfare effects of environmental policy arising from the formation of an international environmental agreement on the participating and non participating countries and thus shed light on the potential incentives for a country to join such an agreement within a n country q goods general equilibrium framework under free trade conditions we consider unilateral and cooperative policy settings and within the latter country specific and fully harmonized policies within the agreement a key result of the paper is the emergence of a negative relationship arising from terms of trade effects between the welfare changes of the participating and non participating countries following the formation of the agreement these however do not result in a zero sum welfare outcome for the world as a whole

is there a glass ceiling in sweden using 1998 data we show that the gender log wage gap in sweden increases throughout the wage distribution and accelerates in the upper tail we interpret this as a strong glass ceiling effect we use quantile regression decompositions to examine whether this pattern can be ascribed primarily to gender differences in labor market characteristics or in the rewards to those characteristics even after extensive controls for gender differences in age education both level and field sector industry and occupation we find that the glass ceiling effect we see in the raw data persists to a considerable extent

the use of quantile regressions in estimating gender wage differentials a case study of the philippines quantile regressions are used to analyse the size components and nature of the gender earnings differentials as well as the returns to education by gender in the philippines over the entire conditional distribution of earnings using data from the 1999 apis survey this approach allows more focused conclusions about the nature of gender earnings differentials incorporating the quantile regression approach to the oaxaca blinder decomposition allows the localization of gender discrimination to particular quantiles of the earnings distribution and permits more targeted policy intervention

should a carbon tax be differentiated across sectors abstract if some but not all countries are cooperating to reduce co2 emissions one could make the following argument a high carbon tax for carbon intensive tradeable sectors in the cooperating countries will reduce the production of goods from these sectors and therefore co2 emissions in the cooperating countries however this will to a large extent be counteracted by increased production of such goods in the countries that have no climate policy and since it is only total co2 emissions from all countries that are relevant for the climate there is no point in a policy that simply relocates co2 emissions from the cooperating countries to the countries that have no climate policy according to this line of reasoning carbon intensive tradeable sectors should thus face a lower carbon tax than other sectors of the economy this paper shows that a carbon tax should not be differentiated across sectors in the economy provided one can use import and export tariffs on all traded goods it is also shown that such a differentiation of carbon taxes is optimal for the cooperating countries if they are prevented from using tariffs on the traded goods however informational or political factors constraining the use of tariffs are likely also to constrain the possibility of differentiating carbon taxes between sectors

second best carbon taxation in the global economy the green paradox and carbon leakage revisited acceleration of global warming resulting from a future carbon tax is large if the price elasticities of oil demand are large and that of oil supply is small the fall in the world interest rate weakens this weak green paradox effect especially if intertemporal substitution is weak still social damages from greenhouse gases drop if the fall in oil supply and cumulative emissions is strong enough if the current carbon tax is set too low the second best future carbon tax is set below the first best too to mitigate adverse green paradox effects unilateral second best optimal carbon taxes exceed the first best taxes due to an import tariff component the intertemporal terms of trade effects of the future carbon tax increase current and future tariffs and those of the current tax lower the current tariff finally carbon leakage and globally altruistic and unilateral second best optimal carbon taxes if non kyoto oil importers price carbon too low are analysed in a three country model of the global economy

the cross country implications of alternative climate policies abstract because of worldwide growing concerns about global climate change great interest has been expressed in the potential of alternative climate policies to reduce global carbon emissions in this paper we compare cross country implications of alternative climate policies including unilateral and multilateral climate policies our main findings are as follows firstly there are large differences in cross country effects of alternative unilateral climate policies when the same given carbon emission reductions are achieved in each abating country respectively meanwhile cross border externalities undermine efficiency of unilateral climate policies secondly there are significant differences in cross country implications of alternative multilateral climate policies when the same global emission reductions are allocated in several different ways among abating countries thirdly it is difficult to reach a stable global climate treaty since any abating country has the incentive to argue for small carbon emission reductions finally multilateral climate policies can reduce the negative impacts of cross border externalities but cannot cure all cross border externalities looking ahead it will be a great policy challenge for the world to reduce carbon emissions in a cost effective way

trade liberalization and the environment in the pacific basin coordinated approaches to mexican trade and environment policy in this paper we analyze the environmental implications of growth and opening up of trade in mexico based on an empirical economywide model in particular we study how tradeoffs between growth and environmental objectives can be minimized by using targeted policies on pollution emissions in coordination with outward oriented trade strategies most economywide studies of trade and environment linkages rely on effluent intensities associated with output and do not allow for substitution between nonpolluting factors labor and capital and polluting intermediate consumption such as chemicals or energy lee and roland holst by contrast pollution emissions in the present model are linked to using polluting inputs rather than directly to output levels we also embed this analysis in a dynamic framework to take account of exogenous components of factor supply and productivity growth over the twenty year period 1990 to 2010 the analysis is presented in three stages first pollution abatement policies are considered alone and their effects on growth sectoral allocation and trade are evaluated the next step is to consider trade liberalization alone trade distortions in place before the nafta and uruguay round accords are removed progressively over time and results calibrate the expansionary effects of trade liberalization as well as its environmental implications these include win win cases such as in the fertilizer sector as well as intensified environmental degradation arising from the transportation sector in a third and last scenario we combine environmental and trade policies and show how they interact these results indicate that the combination of policies generally can mitigate the undesirable effects of each set of policies alone such as trade induced pollution growth and the real contractionary effects of environmental policy thus it appears that more liberal and outward oriented trade policy can coexist with more rigorous attention to environmental values the trade and environment debate has

counterfactual decomposition of changes in wage distributions using quantile regression we propose a method to decompose the changes in the wage distribution over a period of time in several factors contributing to those changes the method is based on the estimation of marginal wage distributions consistent with a conditional distribution estimated by quantile regression as well as with any hypothesized distribution for the covariates comparing the marginal distributions implied by different distributions for the covariates one is then able to perform counterfactual exercises the proposed methodology enables the identification of the sources of the increased wage inequality observed in most countries specifically it decomposes the changes in the wage distribution over a period of time into several factors contributing to those changes namely by discriminating between changes in the characteristics of the working population and changes in the returns to these characteristics we apply this methodology to portuguese data for the period 1986 1995 and find that the observed increase in educational levels contributed decisively towards greater wage inequality copyright 2005 john wiley sons ltd

linking numerical and analytical models of carbon leakage carbon leakage describes the economywide response in carbon emission levels caused by abatement in one part of the economy most quantitative studies of carbon leakage predict that 10 30 percent of unilateral abatement efforts will be offset by emission increases a positive net leakage effect elsewhere in the world economy this is the subject of intense policy focus in international climate policy debates because countries contemplating new policies to reduce domestic emissions worry that their efforts will be rendered costly and ineffective in a recent theoretical study fullerton karney and baylis 2012 henceforth fkb identify a new potential source of carbon leakage effects which they refer to as the abatement resource effect are the intuition for this effect is that when stricter carbon regulation comes into effect in one part of the economy it may draw basic factors of production away from other carbon intensive activities the authors show that if this effect is strong enough an economy may exhibit negative net leakage in response to the policy change that is emissions levels outside of the abating part of the economy may fall as these resources are drawn away and the scale of their operations shrinks fkb identify the key parameters responsible for producing the net leakage effect in their model intuitively it depends on a substitution parameter that governs the ease with which the economy can shift out of the use of carbon ser vices and into other resources within the regulated sector or region a technique effect and on a substitution parameter which governs the ease with which the economy can shift out of

is there a glass ceiling over europe exploring the gender pay gap across the wages distribution using harmonised data from the european union household panel we analyse gender pay gaps by sector across the wages distribution for ten countries we find that the mean gender pay gap in the raw data typically hides large variations in the gap across the wages distribution we use quantile regression qr techniques to control for the effects of individual and job characteristics at different points of the distribution and calculate the part of the gap attributable to differing returns between men and women we find that first gender pay gaps are typically bigger at the top of the wage distribution a finding that is consistent with the existence of glass ceilings for some countries gender pay gaps are also bigger at the bottom of the wage distribution a finding that is consistent with sticky floors third the gender pay gap is typically higher at the top than the bottom end of the wage distribution suggesting that glass ceilings are more prevalent than sticky floors and that these prevail in the majority of our countries fourth the gender pay gap differs significantly across the public and the private sector wages distribution for each of our eu countries

effects of stabex on acps economic growth further evidence the paper deals with the economic growth of the open and small developing countries which signed the lome convention henceforth acps results showing that earnings instability damages their economic performance can be used to support the eu policy of guaranteeing financial aid to those countries suffering reductions in export proceeds the second section of the paper analysing the workings of stabex however highlights certain weaknesses in the effectiveness of stabex transfers when their impact on economic growth is considered the general conclusion is that if the current eu acp negotiations for lome v are to be successful then some aspects of the scheme eligibility criteria and use of funds will have to be radically changed

international trade and environmental quality a survey abstract international trade has been incorporating various aspects of environmental issues since 1970 the extent to which environmental problems might affect many facets of trade or vice versa has been the subject of considerable debate over these years in this article we have attempted to establish some of the links between international trade and environmental quality by performing a comprehensive literature review we discuss issues such as establishing direct and indirect effects of international trade on environmental quality effects of trade on economic development environmental quality and energy and their relation with each other and finally the role of governments and international organizations in this context studies have so far revealed some linkages between trade and environment through conventional trade theory however interactions between international trade and types of pollution their sink and assimilative capacity need to be analyzed using a general equilibrium approach currently very little knowledge and agreement on the nature of interactions between trade theories development process and environmental quality exist existing studies have shown that the structure of environmental regulations should be modified to reflect the existence of trade under imperfect competition therefore further research on the interaction between new trade theory and environmental regulation is needed also theoretical and quantitative analysis regarding the effects of environmental regulations on competitiveness and location decision is needed the intensity and type of environmental measures vary across issues and countries therefore harmonizing environmental measures creates an inefficient atmosphere and to assume that trade restrictions will either improve or reverse the environmental damages is a serious mistake given the dynamic and intricate nature of the problem trade and environment debate continues despite vast research and poses a challenge for researchers and policy makers in the foreseeable future

disadvantage and discrimination in self employment caste gaps in earnings in indian small businesses using the 2004 2005 india human development survey data we estimate and decompose the earnings of household businesses owned by historically marginalized social groups known as scheduled castes and tribes scsts and non scsts across the earnings distribution we find clear differences in characteristics between the two types of businesses with the former faring significantly worse the mean decomposition reveals that as much as 55 of the caste earnings gap could be attributed to the unexplained component quantile regressions suggest that gaps are higher at lower deciles providing some evidence of a sticky floor finally quantile decompositions reveal that the unexplained component is greater at the lower and middle deciles than higher suggesting that scst owned businesses at the lower and middle end of the conditional earnings distribution face greater discrimination

trims environmental taxes and foreign investment various second best policy mixes of investment measures and environmental taxes for a polluted small open economy with foreign capital and immovable trade restrictions are examined the optimal policy mix depends on the types of trade restrictions when tariffs are in place strict policies of pollution taxes and export requirements are optimal for alleviating tariff induced consumption and production distortions when involuntary quotas are used in lieu of tariffs however the optimal policy mix is a zero export requirement and pigouvian taxes on pollution for the case of vers however the optimal policy demands export requirements and a less stringent pollution tax trims impots environnementaux et investissement etranger ce memoire examine certains ensembles de politiques de second ordre portant sur l investissement et les impots environnementaux dans une petite economie ouverte polluee ou il y a capital etranger et restrictions au commerce international quand on a des droits de douane en place des politiques de fiscalite environnementale et d exportations requises sont optimales pour corriger les distorsions aux patterns de production et de consommation engendrees par les droits de douane cependant quand des contingentements involontaires sont en place plutot que des droits de douane le melange optimal de politiques est de ne pas requerir d exportation mais d imposer des taxes a la pigou sur la pollution pour ce qui est des restrictions volontaires a l exportation le melange optimal de politiques reclame une taxe moins forte sur la pollution accompagnee par un certain niveau d exportation requis

rethinking climate change governance and its relationship to the world trading system international climate negotiations have thus far eschewed efforts to incorporate trade restrictions but they have also failed to achieve their objective of reducing global emissions because of this failure some countries are now inclined to act unilaterally and minilaterally in many cases by imposing trade restrictions against third parties such actions are likely to invite retaliation they could even ignite an escalating trade war the best way to avoid such conflicts is not to limit the use of trade restrictions but to make international climate negotiations effective ironically success in addressing climate change multilaterally may require incorporating trade restrictions in a new kind of climate agreement trade restrictions have been used successfully in other international agreements but in these agreements the primary purpose of the restrictions has been to encourage participation that is their primary purpose has been to enforce the agreement this is the role trade restrictions ought to play in a new climate treaty but for them to play this role the design of climate treaties must change if climate treaties are designed strategically the threat to restrict trade will suffice to enforce the agreement and if the threat to restrict trade is credible and the punishment associated with the restriction severe trade restrictions will not actually have to be used by incorporating trade restrictions in this way greenhouse gas emissions can be reduced without putting at risk the gains from multilateral cooperation in trade

coordinating climate and trade policies pareto efficiency and the role of border tax adjustments abstract this paper explores the role of trade instruments in globally efficient climate policies focusing on whether or not some form of border tax adjustment bta is warranted when carbon prices differ internationally the analysis shows that while there is no case for bta when all instruments can be freely deployed pareto efficiency does require a form of bta when carbon taxes in some countries are constrained its purpose then is to partly counteract the impact on emissions of inappropriate carbon pricing there or equivalently to undo the trade distortions such pricing creates the required form of bta is generally complex but a special case is identified in which it optimally has the simple structure envisaged in practical policy discussions it is also shown that the efficiency case for bta depends critically on whether climate policies are pursued by carbon taxation or by cap and trade

is chinese trade policy motivated by environmental concerns abstract this paper analyses whether china s export vat rebates and export taxes are driven by environmental concerns since china struggles to enforce environmental regulation trade policy can be used as a second best environmental policy in a general equilibrium model it is possible to show that the second best export tax increases in a product s pollution intensity the empirical analysis investigates whether the export tax equivalent of partial vat rebates and export taxes are higher for products which are more pollution intensive along several dimensions the results indicate that the vat rebate rates are set in a way that discourages exports of water pollution intensive so 2 intensive and energy intensive products from 2007 on moreover the conservation of natural resources such as minerals metals wood products and precious stones seems to be a key determinant of china s export vat rebate rates there is little evidence that export taxes are motivated by environmental concerns

international trade and the environment policy reform in a polluted small open economy abstract this paper investigates sufficient conditions for welfare improving policy reforms in a small open economy facing many trade and pollution distortions we investigate and compare reform in tax regimes quota regimes and mixed regimes where some pollutants are regulated with taxes and others with quotas it is also shown that the welfare benefits of reforming pollution policy are greater in an economy with international factor mobility than in an economy not subject to such mobility

sweetening the transition in eu sugar preferences the case of fiji the european union grants preferential market access for sugar to a group of african caribbean and pacific acp countries sugar exported under these quotas receives between two and three times the world price these trade preferences are intended as a form of aid but they tend to stifle productivity growth in the recipient countries the european union could better assist acp countries by providing direct development assistance in place of sugar subsidies for example by investing the aid transfers into infrastructure or other essential public services this paper tests this proposition for the case of fiji using a computable general equilibrium model it is found that significant gains in economic performance can be achieved by employing such alternative strategies for aid these gains are particularly strong over the medium to long term when the aid funds are diverted to infrastructure development however there are issues of equity to consider since in the case of fiji the rural poor would be the losers if trade preferences were to be removed moreover the degree of benefit in alternative strategies such as infrastructure development will be contingent on the economy s flexibility which in turn depends upon the country s regulatory regime and education performance

the dynamic impact of unilateral environmental policies this paper builds a two country two sector polluting nonpolluting trade model with directed technical change examining whether unilateral environmental policies can ensure sustainable growth the emission rate of the polluting sector depends on its relative use of a clean and a dirty input a unilateral policy combining clean research subsidies and a trade tax can ensure sustainable growth while unilateral carbon taxes alone increase innovation in the polluting sector abroad and generally cannot ensure sustainable growth relative to autarky and exogenous technical change respectively trade and directed technical change accelerate environmental degradation either under laissez faire or with unilateral carbon taxes yet both help reduce environmental degradation under the appropriate unilateral policy i characterize the optimal unilateral policy analytically and numerically using calibrated simulations knowledge spillovers have the potential to reduce the otherwise large welfare costs of restricting policy to onecountry

trade transboundary pollution and foreign lobbying in this paper we explore the use of trade policy in addressing transboundary stock pollution problems such as acid rain and water pollution we show that a tariff determined by the current level of accumulated pollution can induce the time path of emissions optimal for the downstream polluted country but if the upstream polluting country can lobby the downstream government to impose lower tariffs distortions brought by corruption and foreign lobbying lead to a rise in the upstream country s social welfare and to a decrease in social welfare in the downstream country thus the usefulness of trade policy as a tool for encouraging cooperation and internalizing transboundary externalities depends critically on the degree of governments susceptibility to foreign political influence

estimating the effects of kyoto on bilateral trade flows using matching econometrics many kyoto countries fear a loss of competitiveness due to unilateral climate policy efforts policymakers therefore call for carbon related border tax adjustments with this paper we attempt to estimate the treatment effect of kyoto commitment on bilateral export flows using regression adjusted differences in differences matching techniques the gravity and international environmental agreement formation literatures provide guidelines for the choice of matching variables we find that kyoto countries exports are reduced by 13 to 14 per cent due to kyoto commitment trade effects are largest in energy intensive homogeneous industries such as iron and steel non ferrous metals organic and inorganic chemicals but also in machinery and equipment

caste discrimination in the indian urban labour market abstract this the pioneering quantitative analysis of caste in the indian urban labour market examines the age old problem of caste in the light of discrimination theory and government policy using a survey of workers in delhi the gross wage difference between scheduled untouchable and non scheduled caste is decomposed into its explained and discrimination components and from a model of occupation choice into wage and job discrimination discrimination is found to exist and to operate at least in part through the traditional mechanism viz assignment to jobs with the scheduled castes entering poorly paid dead end jobs it is assisted by methods of recruitment based on contacts prevalent in the manual occupation which also cause past discrimination to carry over to the present its practice serves the economic interests of those who exercise a taste for discrimination

emissions leakage environmental policy and trade frictions abstract we develop a two good general equilibrium model of a small open economy to decompose the effect of a country s unilateral strengthening of environmental policy on pollution emissions in the rest of the world known as emissions leakage we show analytically and numerically that the level of emissions leakage depends on the level of trade friction in the service sector in the model production in the manufacturing sector is associated with pollution emissions and production in the service sector is clean in a special case with free trade in manufacturing and no trade in services no leakage occurs allowing for trade in services we solve for the relationship between trade frictions in the service sector and leakage at lower levels of service sector s trade friction leakage from a small strengthening of environmental regulation decreases increases if services are imported exported finally we simulate the model calibrating the to the canadian economy to compare these effects relative sizes over a range of plausible parameter values leakage is about 18 lower when using trade friction levels estimated from the literature rather than assuming no trade friction in services

a numerical investigation of the potential for negative emissions leakage leakage of greenhouse gas emissions increased emissions in unconstrained regions due to regulations in other regions undermines the effectiveness of sub global climate regulations reduces incentives for unilateral climate initiatives and can result in distortionary trade measures winchester 2012 these concerns are expressed in measures to reduce leakage included in the eu emissions trading scheme and draft legislation in the united states the now defunct waxman markey bill two sources of leakage include changes in fossil fuel prices and trade flows carbone helm and rutherford 2009 leakage via fossilfuel price effects occurs when reduced energy demand in constrained regions decreases fuel prices and increases fuel use in unconstrained regions trade changes contribute to leakage when production increases in unconstrained regions as a result of increased exports to and reduced imports from constrained regions

buy coal a case for supply side environmental policy free riding is at the core of environmental problems if a climate coalition reduces its emissions world prices change and nonparticipants typically emit more they may also extract the dirtiest type of fossil fuel and invest too little in green technology the coalition s second best policy distorts trade and is not time consistent however suppose that the countries can trade the rights to exploit fossil fuel deposits as soon as the market clears the above mentioned problems vanish and the first best is implemented in short the coalition s best policy is to simply buy foreign deposits and conserve them

consequences of a food security strategy for economic welfare income distribution and land degradation the philippine case like many developing countries the philippines pursues a food security strategy in which self sufficiency and price stabilization feature prominently in addition to their widely debated welfare effects food policies based on price and trade restrictions may also accelerate land degradation by promoting expansion of relatively erosive grain crops the paper explores the welfare and environmental implications of food policies first with a simple heuristic model then with an applied general equilibrium model comparing market restrictions with technical progress as alternative food policy strategies the authors find that the former increase land degradation and reduce welfare moreover anti poverty and distributional benefits often claimed for such interventions may be illusory

gender inequality and economic growth a cross country analysis abstract this paper investigates empirically the determinants of economic growth for a set of semi industrialized export oriented economies in which women provide the bulk of labor in the export sector the primary hypothesis tested is that gender inequality which contributes to women s relatively lower wages was a stimulus to growth via the effect on exports during 1975 95 empirical analysis shows that gdp growth is positively related to gender wage inequality in contrast to recent work which suggests that income inequality slows growth evidence also indicates that part of the impact of gender wage inequality on growth is transmitted through its positive effect on investment as a share of gdp

tariff and environmental policies with product standards for a small open economy with consumption based pollution emissions the first best optimal policy prescription is free trade along with a pigouvian tax on emissions therefore a package of coordinated tax reform by replacing tariffs with emission taxes can lower pollution emissions and increase market access and hence improve residents welfare and government revenue as long as the initial tariffs are relatively high numerical simulations confirm the results obtained abstract from author

international spillover and rebound effects from increased energy efficiency in germany the pollution energy leakage literature raises the concern that policies implemented in one country such as a carbon tax or tight energy restrictions might simply result in the reallocation of energy use to other countries this paper addresses these concerns in the context of policies to increase energy efficiency rather than direct action to reduce energy use using a global cge simulation model we extend the analyses of economy wide rebound from the national focus of previous studies to incorporate international spill over effects from trade in goods and services our focus is to investigate whether these effects have the potential to increase or reduce the overall global rebound of local energy efficiency improvements in the case we consider increased energy efficiency in german production generates changes in comparative advantage that produce negative leakage effects thereby actually rendering global rebound less than national rebound

impacts of regional productivity growth decoupling and pollution leakage abstractimpacts of regional productivity growth decoupling and pollution leakage regional studies this paper examines the issues of decoupling regional economic growth and pollution and the extent to which pollution effects spillover regional national borders specifically a uk regionally disaggregated computable general equilibrium cge model is used to investigate the relationship between economic growth and the level of co2 emissions posited by the environmental kuznets curve ekc conjecture using production accounting principle pap and consumption accounting principle cap environmental accounting methods the simulation results suggest that at the regional level the existence of an ekc relationship depends on the source of regional growth and the how this relationship is specified

validating energy oriented cge models although cge models have received heavy usage they are often criticized as being insufficiently validated key parameters are often not econometrically estimated and the performance of the model as a whole is rarely checked against historical outcomes as a consequence questions frequently arise as to how much faith one can put in cge results in this paper we employ a novel approach to the validation of a widely utilized global cge model gtap e by comparing the variance of model generated petroleum price distributions driven by historical demand and supply shocks to the model with observed five year moving average price distributions we conclude that energy demand in gtap e is far too price elastic over this time frame after incorporating the latest econometric estimates of energy demand and supply elasticities we revisit the validation question and find the model to perform more satisfactorily as a further check we compare a deterministic global general equilibrium simulation based on historical realizations over the 2001 2006 period during which petroleum prices rose sharply along with growing global energy demands as anticipated by the stochastic simulations the revised model parameters perform much better than the original gtap e parameters in this global general equilibrium context

a welfare analysis of the ec acp sugar protocol the sugar protocol laid down in the convention of lome has been an established instrument of commodity policy for nearly 20 years its basic rule is that the ec imports at guaranteed prices specified quantities of sugar from acp countries it is the objective of the article to provide an economic evaluation of the sugar protocol impacts on prices trade export earnings and economic welfare are elaborated the sugar protocol s impacts on the level and instabilty of sugar export earnings are jointly evaluated by computing transfer and risk benefits along the lines of newbery stiglitz a major conclusion is that the policy has to be evaluated differently from the donor s and the recipient s point of view the sugar protocol induces international income transfers that are untargeted in terms of per capita income it causes however rather strong risk benefits compared with other instruments of international commodity policy and sizeable welfare gains for individual recipient countries

the paradox of preferences regional trade agreements and trade costs in services abstract this paper analyzes the relationship between regional trade integration and trade costs in services industries the empirical analysis relies on the one hand on a dataset of theory consistent bilateral trade costs calculated for 55 countries over the period 1999 2009 and on the other hand on an analysis of services commitments in 66 regional trade agreements to which these countries are parties despite the proliferation of services rtas in the past decade we find that trade costs are only slightly lower due to the impact of these agreements in addition we find that the trade cost reductions that do take place tend to happen before the agreement is signed this mechanism is consistent with countries using services rtas as a way of locking in reforms finally we find that the preferential margin of services rtas is quite thin members and non members both see slightly lower trade costs when an rta is signed we discuss the possible explanations for these findings in terms of the nature of services rtas and their relationship with regulatory reform in signatory countries based on these results we argue that regionalism in the case of services seems relatively non discriminatory and does not lead to substantial trade preferences

double dividend with trade distortions analytical results and evidence from chile abstract the double dividend debate evolves around the possibility or not of substituting environmental taxes for more distortionary taxes to reduce both pollution degradation and or damages the first dividend and the excess burden of existing taxes the second dividend without eroding tax revenues this paper contributes to the double dividend debate with a formal analysis and some numerical evidence emphasizing trade and environmental distortions the substitution of environmental taxes for trade distortions has been neglected in the double dividend debate which has centered on labor market distortions conditions for the existence of a double dividend are derived for different characterizations of preferences and policy menus we empirically explore the trade environment double dividend with an applied general equilibrium model of the chilean economy the model includes many distortions and a vector of six air pollution effluents their health incidences and associated damages which are assumed nonseparable from market goods findings suggest solid evidence of a trade environment double dividend in the case of chile swapping environmental taxes for trade distortions improves welfare the swap would even pay for itself under the assumption of separable pollution damages from market good consumption

participation in gvcs and co2 emissions abstract this paper attempts to explore the determinants of co2 emissions in the context of international trade while there exist studies that examine the roles of horizontal specialization and inter industry trade transactions little previous research attention has been paid to the roles of vertical specialization and intra industry trade transactions in affecting co2 emissions to fill the knowledge gap this study uses the panel data of 62 countries and regions for the period of 1995 2011 to estimate the effect of participation in global value chains gvcs on per capita co2 emissions major findings include 1 the relationship between participation degrees in gvcs and per capita co2 emissions is found to be inversely u shaped at the aggregate economy level and for most individual industries 2 per capita gdp shows an n shaped relationship with per capita co2 emissions and 3 benign drivers of co2 emissions include r d energy conservation and population control it can be concluded that countries with low gdp or gvc participation degrees are expected to experience worsening co2 emissions in the short or even medium run this trend however can be moderated or even reversed with more r d investments

policy diffusion of emission standards is there a race to the top in a dramatic example of policy diffusion the past three decades have witnessed the spread of automobile emission standards throughout the world contrary to fears that global competition would produce a race to the bottom there appears to be a race to the top not only among rich countries but also among poor ones using econometric analysis of the adoption of automobile emission standards over the past twenty years for 129 countries the author argues that this global diffusion results from countries efforts to stay competitive in the international market due to the pressure from importing countries that have adopted stringent emission standards even developing countries have rapidly moved to adopt rich country standards the evidence shows that adoption of automobile emission standards correlates with an increase in the total value of automobile exports under some conditions economic incentives in a global market can be a complement to environmental protection

unilateral climate policy with production based and consumption based carbon emission taxes this paper characterizes a sub global climate coalition s unilateral policy of reaching a given climate damage reduction goal at minimum costs following eichner and pethig j environ econ manag 2013 we set up a two country two period model in which one of the countries represents a climate coalition that implements a binding ceiling on the world s first period emissions the other country is the rest of the world and refrains from taking action the coalition can make use of production based carbon emission taxes in both periods as in eichner and pethig j environ econ manag 2013 but here we consider consumption based carbon emission taxes as an additional instrument the central question is whether and how the coalition employs the consumption based taxes along with the production based taxes in its unilateral cost effective ceiling policy all cost effective policies identified analytically and numerically consist of a mix of both types of taxes implying that there is a tax mix which is less expensive for the coalition than stand alone consumption based or stand alone production based taxes with full cooperation both taxes are perfect substitutes in our model but in case of unilateral action they are imperfect substitutes because coalition s total welfare loss from two different but moderate distortions is smaller than that from a single but severe distortion

greenhouse gas emission controls and firm locations in north south trade this paper studies greenhouse gas emission ghg controls in the presence of international carbon leakage through international firm relocation in a new economic geography model with two countries north and south only north sets a target for ghg emissions we compare the consequences of emission quotas and emission taxes under trade liberalization on location of two manufacturing sectors with different emission intensities and degrees of carbon leakage with low trade costs further trade liberalization increases global emissions by facilitating carbon leakage regulation by quotas leads to spatial sorting resulting in less carbon leakage and less global emissions than regulation by taxes

leakage welfare and cost effectiveness of carbon policy policymakers fear that a unilateral carbon policy will reduce competitiveness increase imports and lead to higher carbon emissions elsewhere leakage in fullerton karney and baylis 2012 we show that it may actually reduce emissions in other sectors negative leakage but reducing emissions in both sectors may merely reflect welfare costs of carbon policy that reduce real income and thus reduce consumption of both outputs these possibilities capture the concern that unilateral carbon policy might have a high cost per global unit of carbon abated that is low cost effectiveness based on harberger 1962 the two input two output analytical general equilibrium model of fullerton karney and baylis 2012 could represent two countries or two sectors of a closed economy each sector has some initial carbon tax or price and the paper solves for the effect of a small increase in one sector s carbon tax on the quantity of emissions in each sector but it does not solve for welfare effects here we use the same model but derive expressions for the costeffectiveness of a unilateral carbon tax the welfare cost per ton of emission reduction we show that higher leakage does not always mean lower welfare if one sector is already taxed at a higher rate then an increase in the other sector s tax might reduce deadweight loss from preexisting misallocations thus abatement can have negative cost the welfare cost most directly depends on the relative levels of tax in the two sectors we show that negative leakage always corresponds to a negative income effect but negative income

the welfare consequences of pollution tax harmonization a key and often controversial issue in environmental negotiations is the appropriate extent of harmonization of environmental policies this paper within a general equilibrium model of international trade with endogenous pollution discharges identifies instances in which pollution tax harmonization can deliver potential pareto improvements

trade and the environment a partial synthesis there is an emerging consensus in the environmentalist community opposing free trade while some economists view this as simply another outlet for protectionism recent work has begun to move beyond the rhetoric to probe more deeply into the theoretical and empirical relationships between international trade and environmental quality the purpose of the present paper is twofold we first integrate some of the existing literature by using the simple concepts of general equilibrium pollution supply and demand our survey of the trade and environment literature is more

spatial climate economic models in the design of optimal climate policies across locations we couple a one dimensional energy balance climate model with heat transportation across latitudes with an economic growth model we derive temperature and damage distributions across locations and optimal taxes on fossil fuels which in contrast to zero dimensional integrated assessment models account for cross latitude externalities we analyze the impact of welfare weights on the spatial structure of optimal carbon taxes and identify conditions under which these taxes are spatially nonhomogeneous and are lower in latitudes with relatively lower per capita income populations we show the way that heat transportation affects local economic variables and taxes and locate sufficient conditions for optimal mitigation policies to have rapid ramp up initially and then decrease over time

evolving comparative advantage and the impact of climate change in agricultural markets evidence from 1 7 million fields around the world a large agronomic literature models the implications of climate change for a variety of crops and locations around the world the goal of the present paper is to quantify the macro level consequences of these micro level shocks using an extremely rich micro level data set that contains information about the productivity both before and after climate change of each of 10 crops for each of 1 7 million fields covering the surface of the earth we find that the impact of climate change on these agricultural markets would amount to a 0 26 percent reduction in global gdp when trade and production patterns are allowed to adjust since the value of output in our 10 crops is equal to 1 8 percent of world gdp this corresponds to about one sixth of total crop value

structural adjustment and soil degradation in tanzania a cge model approach with endogenous soil productivity abstract in this paper a model of the nitrogen cycle in the soil is incorporated in a computable general equilibrium cge model of the tanzanian economy thus establishing a two way link between the environment and the economy for a given level of natural soil productivity profit maximising farmers choose input levels and hence production volumes which in turn influence soil productivity in the following years through the recycling of nitrogen from the residues of roots and stover and the degree of erosion the model is used to simulate the effects of typical structural adjustment policies like a reduction in agro chemicals subsidies reduced implicit export tax rate etc after 10 years the result of a joint implementation is a 9 higher gross domestic product gdp level compared to the baseline scenario the effect of soil degradation is found to represent a reduction in the gdp level of more than 5 for the same time period

between a rock and a hard place a trade theory analysis of leakage under production and consumption based policies without a comprehensive global climate agreement carbon leakage remains a contentious issue consumption based pricing of emissions which could in practice be implemented with a full border tax adjustment bta has been forwarded as an option to increase the effectiveness of unilateral climate policy this paper questions the economic rationale behind this approach using a theoretical 2 times 2 trade model in which leakage occurs through terms of trade effects we show analytically first that consumption based pricing of emissions does not necessarily result in less leakage than production based policies second the sign of the optimal unilateral carbon tariff depends on the carbon intensity differential between the foreign country s exporting and non exporting sectors and not on the differential between home s and foreign s exporting sectors as implied by the full bta approach third based on empirical data for the year 2004 our model implies that full bta applied by the european union on e g imports from and exports to china would by shifting china s production from the export sector with a relatively low carbon intensity towards the more carbon intensive non export sector actually increase leakage

kyoto and carbon leakage an empirical analysis of the carbon content of bilateral trade abstract has the kyoto protocol induced carbon leakage we conduct the first empirical ex post evaluation of the protocol we derive a theoretical gravity equation for the carbon dioxide content of trade which accounts for intermediate inputs both domestic and imported the structure of our new panel database of the carbon content of sectoral bilateral trade flows allows controlling for the endogenous selection of countries into the kyoto protocol binding commitments under kyoto have increased committed countries embodied carbon imports from noncommitted countries by around 8 and the emission intensity of their imports by about 3 hence kyoto has indeed led to leakage

international environmental agreements with consistent conjectures we introduce consistent conjectures into barrett 1994 canonical model of international environmental agreements the existing literature assumes inconsistent nash conjectures despite the fact that policymakers recognize that abatement levels are strategic substitutes and increases in abatement generate carbon leakage with consistent conjectures much of the conventional wisdom is reversed the non cooperative abatement level is below the nash equilibrium the difference between nash and consistent conjectures is greatest when benefits are large and costs are small we find that large coalitions cannot form however small coalitions can result in substantial increases in abatement relative to the non cooperative outcome

migration and the environment policy reform in a polluted open economy previous literature on labour migration has paid little attention to the influence of environmental attributes this paper attempts to remedy this void by developing a simple two region general equilibrium model with amenities playing a key role in affecting migration flows specifically we argue that in the presence of an environmental externality interregional labour migration depends not only on wages but also on amenities people may leave a region offering higher wages if the resulting utility loss from worsened amenities exceeds the gain in wages policies should be adopted by regions or nations to regulate the environment to provide for the quality of living to attain this goal regional or international policy cooperation on tradable pollution permits can be superior to pollution permits supplied independently by each region or nation while non tradable between them

climate change policy market structure and carbon leakage abstract the 1997 kyoto protocol on climate change obliges the industrialized countries to initiate the international effort of abating anthropogenic greenhouse gas ghg emissions if such an initiative is to be taken the associated competitive effects may lead to significant relocation of developed countries energy intensive production this paper examines this issue i adopt an oligopolistic structure combined with increasing returns to scale production technologies to represent the strategic interaction among the firms producing energy intensive products this representation is then embedded within a multi regional computable general equilibrium model which in turn is used for quantifying these relocational effects the results suggest that significant relocation of energy intensive industries away from the oecd may occur depending on the type of market structure with leakage rates as high as 130 in which case ghg control policies in the industrialized countries actually lead to higher global emissions

the interface between growth trade pollution and natural resource use in chile evidence from an economywide model abstract we investigate the implications of trade liberalization and pollution taxes on aggregate income pollution and natural resource use in chile with a neoclassical economywide model comprising 75 sectors the model incorporates 13 measures of pollution effluents which are linked to the use of polluting inputs and energy use we estimate the economic and environmental impact of chile s participation in nafta mercosur of unilateral trade liberalization and effluent taxes unilateral trade liberalization induces substantial worsening of pollution emissions and expansion of resource based sectors partly because of access to cheaper energy nafta integration is environmentally benign in terms of pollution emissions

bad karma or discrimination male female wage gaps among salaried workers in india summary we use nationally representative data from the employment unemployment surveys in 1999 2000 and 2009 10 to explore gender wage gaps among regular wage salaried rws workers in india both at the mean as well as along the entire wage distribution to see what happens where the gender log wage gap at the mean is 55 in 1999 2000 and 49 in 2009 10 but this change is not statistically significant the blinder oaxaca and the machado mata melly decompositions indicate that in both years the bulk of the gender wage gap is unexplained i e possibly discriminatory they also reveal that over the decade while the wage earning characteristics of women improved relative to men the discriminatory component of the gender wage gap also increased in fact in 2009 10 if women were paid like men they would have earned more than men on account of their characteristics in both years we see the existence of the sticky floor in that gender wage gaps are higher among low wage earners and lower for high wage earners over the ten year period we find that the sticky floor became stickier for rws women machado mata melly decompositions reveal that in both years women at the lower end of the wage distribution face higher discriminatory gaps compared to women at the upper end

unilateral co2 reductions and carbon leakage the consequences of international trade in oil and basic materials a recursively dynamic general equilibrium model featuring six world regions with trade in energy and non energy goods is used to simulate the period from 1990 through 2100 in 10 year intervals the simulations explore the effect of unilateral action by the oecd to curb global co2 emissions unilateral cuts create incentives for free riding by non participating regions so that global emissions are reduced by less than the amount that the oecd cuts back its regional emissions carbon leakage occurs through two channels first basic materials production increases in unconstrained regions resulting in increased carbon intensity of gdp second reductions in oecd oil imports cause the world oil price to fall leading to an increased energy intensity in the non participant regions in this paper we use a general equilibrium model to assess the extent to which these two mechanisms reduce the effectiveness of oecd reductions in curbing global co2 concentrations

changes in wage structure in urban india 1983 2004 a quantile regression decomposition summary this paper utilizes individual level earnings data from urban india to examine the evolution of wages during 1983 2004 across the entire wage distribution quantile regression analysis reveals that the effects of many covariates are not constant across distribution returns to secondary and tertiary education not only increased in the 1990s but also became more heterogeneous suggesting wage inequality may increase further in near future as more workers get higher education moreover the quantile regression decomposition suggests that the increase in returns has been the driving force behind the increase in wages in both the 1980s and 1990s

trade and carbon taxes we study various scenarios for taxing emissions of carbon dioxide c02 the question is how carbon tax policies will perform given interna tional trade if countries adopt different tax rates we investigate this question quantitatively using cim earth a newly developed open source computable general equilibrium cge model since climate change is a function of global c02 emissions an efficient strategy for control ling emissions would be to impose the same price wherever they occur such an approach presents a free riding problem however because nations have an incentive not to comply while gaining the ben efits of reduced emissions elsewhere moreover because of distributive concerns and claims about

assessing alternative solutions to carbon leakage abstract a modified version of the computable general equilibrium gtap e model is developed in order to assess the economic and carbon emission effects of alternative trade policy measures aimed at reducing carbon leakage we compare several unilateral policy measures implemented by countries subject to an emissions level cap results provide evidence of the scarce effectiveness of these policies in reducing the carbon leakage rate and conversely some of the trade measures that are discussed seem to be more consistent with the goal of protecting market shares of national firms in the domestic markets of abating countries assessing environmental and competitiveness outcomes jointly confirms that a global cooperative solution would be the most effective as well as an efficient policy option for reducing carbon leakage

the impact of border carbon adjustments under alternative producer responses border carbon adjustments bcas have been proposed to address leakage and competitiveness concerns in traditional assessments firms regard bcas as output taxes rather than implicit emissions taxes using a stylized energy economic model we analyze the impact of bcas for alternative producer responses when firms view bcas as an implicit emissions tax the outcome depends on whether or not firms can differentiate production across destination markets if firms are able to produce a lowemissions variety for regions imposing bcas results are similar to when firms regard bcas as an output tax if firms produce a single variety for all markets bcas result in larger leakage reductions than in standard approaches we also find that bcas are less effective at addressing competitive concerns in scenarios that result in larger leakage reductions jel codes f18 q54

pollution intensity of gdp and trade policy can the world bank be wrong abstract what are the environmental implications of open trade policies in developing countries economic theory and environmental critics suggest they worsen environmental quality this conventional wisdom has been challenged by several studies which suggest that outward oriented trade policies are likely to be win win enhance economic growth and environmental quality this paper challenges revised conventional wisdom rcw by demonstrating that developing countries with outward oriented trade policies have higher pollution intensities of gdp than those following inward oriented policies the paper examines why the evidence reported here differs so sharply from rcw studies considers the policy implications of these results and identifies reasons why despite them it may not make sense to totally discount future potential win win opportunities

targeted carbon tax reforms abstract in the presence of intersectoral linkages sector specific carbon tax changes can have complex general equilibrium effects in particular a carbon tax on the emissions of a sector can lead to an increase in aggregate emissions we analytically characterise how incremental taxes on the emissions of any set of sectors affect aggregate emissions we show that carbon tax reforms that target sectors based on their position in the production network can achieve a greater reduction in aggregate emissions than reforms that target sectors based on their direct emissions alone we illustrate the effects of carbon tax reforms by calibrating our intersectoral network model to the economies of two countries

cross border pollution terms of trade and welfare we construct a two good general equilibrium model of international trade for two small open economies where pollution from production is transmitted across borders governments in both countries impose emission taxes non cooperatively within this framework we examine the effect of changes in the degree of cross border pollution on nash emission taxes emission levels and welfare we do so under two scenarios when changes in cross border pollution do not affect domestic pollution non strategic and when they do strategic we also examine the effect of changes in international terms of trade on pollution and welfare when cross border pollution is non strategic

estimating carbon leakage and the efficiency of border adjustments in general equilibrium does sectoral aggregation matter abstract estimates of the carbon leakage resulting from sub global climate policies tend to be lower when using economy wide general equilibrium models than what technology specific and bottom up models suggest in order to test whether this difference is due to excessive sectoral aggregation i exploit disaggregated data and estimate unobserved values to create a dataset with rich industrial sector detail the bias caused by sectoral aggregation is estimated by calibrating a computable general equilibrium model to this dataset and comparing results with those generated from more aggregated data a stylized unilateral carbon pricing policy is simulated results show that aggregated calibrations overestimate industrial output loss and underestimate the increase in the co 2 embodied in imports the efficiency of border carbon adjustments at reducing leakage is also underestimated however i find that general equilibrium estimates of carbon prices and economy wide leakage rates are mostly unaffected by the degree of industrial aggregation

climate and international trade policies when emissions affect production possibilities abstract in this paper we develop a model of international trade and climate change in which emission discharges arising from production have a feedback effect on national production sectors by impacting upon effective factor endowments with this context the objectives are first to provide a general characterization of pareto efficient climate and trade policies and second to examine the possibility starting from non pareto efficient equilibria for pareto improving environmental policies we provide conditions under which several particular reforms of carbon taxes are welfare improving

cheaper oil a turning point in paris climate talk abstract the 2015 paris climate conference is designed to achieve a legally binding agreement on climate change for the first time in over 20 years however the participants face a much tougher task in striking a new deal after the disappointing preparatory climate change talks in lima however falling oil prices have created more room to maneuver for the forthcoming global climate talks than previously thought average global oil prices have plunged from usd 110 per barrel in june 2014 to approximately usd 60 per barrel in may 2015 with the sharply falling oil prices and the downward pressure on gas and coal prices both the removal of fossil fuel subsidies ffs and the implementation of a carbon tax could be conducted without raising energy costs a growing body of research suggests that removing ffs and implementing a carbon tax could significantly reduce carbon emissions thus the approximately 50 drop in oil prices has provided a window of opportunity to reduce carbon emissions by removing ffs and internalizing climatic externalities worldwide as this window will not last forever both these measures should be implemented quickly and be considered central to the paris climate change conference compared with the lack of success in the previous two decades of climate diplomacy these two measures constitute technical and economic factors that will make a difference in the 2015 un climate change conference

optimal environmental border adjustments under the general agreement on tariffs and trade a country choosing to adopt border carbon adjustments based on embodied emissions is motivated by both environmental and strategic incentives we argue that the strategic component is inconsistent with commitments under the general agreement on tariffs and trade gatt we extend the theory of border adjustments to neutralize the strategic incentive and consider the remaining environmental incentive in a simplified structure the theory supports border adjustments on carbon content that are below the domestic carbon price because price signals sent through border adjustments inadvertently encourage consumption of emissions intensive goods in unregulated regions the theoretic intuition is supported in our applied numeric simulations countries imposing border adjustments at the domestic carbon price will be extracting rents from unregulated regions at the expense of efficient environmental policy and consistency with international trade law

trade and pollution linkages piecemeal reform and optimal intervention we demonstrate how coordinated trade and environmental policy can achieve ef ficiency and pollution mitigation gains superior to those obtained without such coordination we show how trade and environment linkages give rise to complex second best policy issues and derive optimal interventions and sufficient conditions for welfare improving piecemeal trade and environmental policy reforms in a small economy changing trade and environ ment distortions in proportion to their optimal levels increases welfare we decompose the economic and environment effects of policies targeted at trade and pollution in both con sumption and production we also decompose production responses into output adjustments and changes in pollution intensities

on the decomposition of wage differentials the often used method for decomposing wage differentials into human capital and discrimination components is reformulated so that both t he disadvantage or cost discrimination it imposes on a black or minority wage earner and the advantage or benefit it bestows on a white or majority wage earner can be estimated copyright 1988 by mit press

subglobal climate agreements and energy intensive activities an evaluation of carbon leakage in the copper industry subglobal climate policies induce changes in international competitiveness and favour a relocation of carbon emitting activities to nonabating regions in this paper we evaluate the potential for co abatement and the emissions leakage effect in the copper industry a prominent energy intensive trade exposed sector we formulate a plant level spatial equilibrium model for copper commodities in which parameters describing the behavioural response of agents are calibrated to a set of estimated price elasticities we find producers and consumers to be price inelastic even in the long run making the copper industry unresponsive to climate policies monte carlo simulations with our model based on statistical uncertainty on elasticity estimates suggest that around 30 per cent of emissions reductions in industrialised countries would be compensated by an increase of emissions in nonabating countries

international commodity agreements design and performance abstract this article traces the design and performance of the five currently or recently active international commodity agreements icas in cocoa coffee natural rubber sugar and tin following detailed discussion of each of these the author makes three observations that icas can only be successful provided that they command a consensus in their industries that existing agreements are not robust enough with regard to exchange rates and that existing agreements are poorly drafted the author argues that the collapse of the tin agreement in october 1985 may have marked the end of the postwar chapter in the commodity intervention story he finds it improbable that new icas will emerge and suggests instead that more of the existing agreements will lapse

biases in the allocation of foreign aid some new evidence abstract the purpose of the paper is to examine the pattern of bilateral and multilateral foreign aid allocations during the 1970s cross section and pooled regressions for a set of roughly 90 countries where aid allocations have been relatively free of gross political overtones confirm the well known bias in per capita aid flows against populous countries butdo not provide evidence of a middle income bias instead regressions on 1976 1978 aid flows and per capita incomes of recipient countries seem to suggest a low income bias i e low income countries received more aid per capita than middle income countries yet there was asample of extremely poor countries which remained neglected in foreign aid allocations

free trade and global warming a trade theory view of the kyoto protocol this paper demonstrates how three important results in environmental economics true under mild conditions in closed economies are false or need serious amendment in a world with international trade in goods since the three results we highlight have framed much of the ongoing discussion and research on the kyoto protocol our viewpoint from trade theory suggests a re examination may be in order specifically we demonstrate that in an open trading world but not in a closed economy setting 1 unilateral emission reductions by the rich north can create self interested emission reductions by the unconstrained poor south 2 simple rules for allocating emission reductions across countries such as uniform reductions may well be efficient even if international trade in emission permits is not allowed and 3 when international emission permit trade does occur it may make both participants in the trade worse off and increase global emissions

pollution content tariffs environmental rent shifting and the control of cross border pollution this paper considers the optimal unilateral policy for a country that imports a good from a neighbouring country and is harmed by pollution generated during the production of that good if the foreign country has a variable abatement technology then home has an incentive to impose a tax on the pollution content of imports a pollution content tariff foreign regulation of pollution does not eliminate home s incentives to intervene but instead may create rent shifting opportunities by making the right to pollute a scarce asset foreign pollution quotas create rents that the home government can try to extract

public pollution abatement regional capital mobility and tax competition the environmental economics literature has ignored the effects of the interaction among capital mobility private and public pollution abatement and cross border pollution on environmental policies we analyze these effects in the context of a general equilibrium model we find among other things that i when countries are symmetric the presence of public pollution abatement makes nash equilibrium pollution taxes efficient while lump sum taxes remain inefficient and ii when countries are asymmetric both taxes are inefficient and the nash equilibrium pollution taxes depend mainly on the direction of capital mobility factor intensity and the degree of cross border pollution these results indicate that policy cooperation is more important when countries are different

emissions taxes versus intensity standards second best environmental policies with incomplete regulation the best emissions tax or emissions cap may be an inferior instrument under incomplete regulation leakage without leakage an intensity standard regulating emissions per unit of output is inferior due to an implicit output subsidy this inefficiency can be eliminated by an additional consumption tax with leakage an intensity standard can dominate the optimal emissions tax since the implicit output subsidy prevents leakage the addition of a consumption tax improves an intensity standard s efficiency may prevent leakage and may be efficient comparing intensity standards to output based updating shows that the latter dominates if updating is sufficiently flexible

the case for international emission trade in the absence of cooperative climate policy we evaluate the efficacy of international trade in carbon emission permits when countries are guided strictly by their national self interest to do so we construct a calibrated general equilibrium model that jointly describes the world economy and the strategic incentives that guide the design of national abatement policies countries decisions about their participation in a trading system and about their initial permit endowment are made noncooperatively so a priori it is not clear that permit trade will induce participation in international abatement agreements or that participation will result in significant environmental gains despite this we find that emission trade agreements can be effective that smaller groupings pairing developing and developed world partners often perform better than agreements with larger rosters and that general equilibrium responses play an important role in shaping these outcomes