climate coalitions and international trade assessment of cooperation incentives by issue linkage this paper investigates climate control coalition games it studies whether incentives exist for non cooperating nations like the usa to join a coalition based upon issue linkage issue linkage is considered through increased r d expenditures triggering improved technological innovations that advance energy efficiencies model calculations demonstrate that incentives exist for non cooperating countries like the usa to join a climate control coalition if nations cooperate on technological innovations restrictions on trade such as sanction mechanisms against non cooperating countries are not necessarily an incentive to join a coalition technological spillover effects lead to improved economic situations and increased energy efficiencies in non cooperating countries

input versus emission taxes environmental taxes in a mass balance and transaction costs perspective the standard policy recommendation to limit pollution is to use taxes or tradeable quotas on emissions a general emphasis on emissions does not however take proper account of the characteristics of the material flow through the economy an analysis of the relationships between transaction costs and features of this flow shows that it may be less costly to tax inputs into the economy the paper focuses on the advantages of a mass flow perspective in environmental economics the trade off between the precision of an environmental regulation and its implementation costs and develops criteria for choosing between input and emission related instruments

closing coal economic and moral incentives climate policy requires that much of the world s reserves of fossil fuels remain unburned this paper makes the case for implementing this directly through policy to close the global coal industry coal is singled out because of its high emissions intensity low rents per unit value local environmental costs and sheer scale direct supply policy the sequenced closure of coal mines may lead to less policy leakage across countries and time than other policies based on demand or price management it also has the advantage of involving relatively few players and leading to clear cut and observable outcomes appropriately sequenced closure of the world coal industry could we suggest create the moral force needed to mobilize collective international action

supply versus demand side policies in the presence of carbon leakage and the green paradox we consider a climate coalition that seeks to reduce global emissions in the presence of carbon leakage and resource exhaustibility we show that a credible announcement of future unilateral supply side policies delays foreign emissions and we derive the optimal combination of consumer taxes and producer taxes when we consider leakages from free riders both within periods and across periods the tax shares generally differ over time a decline in the present value of the social cost of carbon over time supports a time path where the consumers tax share of the total carbon tax also declines over time we illustrate our findings with a numerical model

trade in fossil fuel deposits for preservation and strategic action abstract in the world economy with interdependent markets for fossil fuel deposits and extracted fossil fuel some coalition of countries may fight climate change by purchasing and preserving fossil fuel deposits which would be exploited otherwise assuming that deposits are traded on a market with a uniform price we find that the outcome is efficient if the coalition is a price taker in both markets but inefficient if it acts strategically in the deposit market but not in the fuel market or acts strategically in both markets the latter result demonstrates that harstad s 2012 theorem 1 efficiency despite strategic action result is not robust with respect to changes in the concepts of the deposit market and market or bargaining power in a simplified parametric version of the game a strategically acting coalition buys fewer deposits consumes more fuel and puts up with higher climate damage than in first best

games of climate change with international trade we analyse games of greenhouse gas emission reduction in which the emissions and the emission reduction costs of one country depend on other countries emission abatement in an analytically tractable model we show that international trade effects on costs and emissions can either increase or decrease incentives to reduce emissions and to cooperate on emission abatement in some specifications optimal emission reduction is unaffected by trade we therefore specify the model further calibrating it to larger models that estimate the costs of emission reduction trade effects and impacts of climate change if trade effects are driven by total emission reduction costs of other countries cooperation is slightly more difficult than in the case without trade effects if trade effects are determined by relative emission reduction efforts in other countries cooperation becomes easier carbon leakage does not affect our qualitative insights although it does change the numbers

the role of export subsisies when product quality is unknown abstract we explore the role of export subsidies when foreign goods are initially of unknown quality to domestic consumers absent export subsidies entry of high quality firms may be blocked by their inability to sell at prices reflecting their true quality export subsidies can break this entry barrier and increase welfare moreover even when high quality firms find it possible to signal their quality to consumers through an introductory pricing strategy a rolefor government policy can arise the signal low introductory price transfers surplus from foreign producers to domestic consumers and can be avoided with an appropriate export tax subsidy policy

bottom up world climate policies preserving fossil fuel deposits vs capping fuel consumption the policy of purchasing fossil fuel deposits for preservation is an alternative to the demand side climate policies that predominate in practice and in professional studies this paper analyzes the deposit purchase approach and compares it to the standard demand side policy in a model with international trade and non cooperative governments that account for the effects of their policies on equilibrium prices we investigate how the two regimes differ with respect to their equilibrium allocations and in particular with respect to the countries mitigation effort and welfare if countries are symmetric mitigation is stronger in the demand side than in the supply side regime and the transition from the latter to the former is welfare enhancing for all countries if countries have different endowments of deposits in a two country economy the country with higher extraction costs does not purchase deposits for preservation and the country with lower extraction costs is better off with the supply side than with the demand side policy finally we consider the case of combined policies and find surprisingly that no equilibrium in pure strategies exists when heterogeneous countries apply both policy instruments politiques climatiques mondiales ascendantes preservation des gisements de combustibles fossiles par opposition a la limitation de la consommation de carburant la politique d achat de gisements de combustibles fossiles aux fins de preservation represente une alternative aux politiques climatiques axees sur la demande predominant a la fois dans la pratique mais aussi dans les etudes professionnelles cet article analyse l approche fondee sur l achat de gisements et la compare a la politique standard axee sur la demande dans un modele de commerce international et de gouvernements non cooperatifs prenant en compte les effets de leurs politiques sur les prix d equilibre nous avons recherche en quoi les deux regimes differaient relativement a leur repartition de l equilibre et notamment relativement a l effort d attenuation et a la protection sociale si les pays sont symetriques l attenuation est plus prononcee dans un systeme axe sur la demande comparativement a un systeme axe sur l offre et la transition du second au premier systeme permet d ameliorer la protection sociale pour tous les pays dans une economie a deux pays differemment dotes en matiere de gisements le pays ayant les couts d extraction les plus eleves n achete pas de gisements a des fins de preservation tandis que le pays ayant les couts d extraction les moins eleves se retrouve en meilleure posture dans une politique axee sur l offre plutot que sur la demande pour terminer nous examinons le cas des politiques combinees et etonnamment nous constatons qu il n existe aucun equilibre en matiere de strategies pures lorsque des pays heterogenes appliquent les deux moyens d action

is the wto passe the wto has delivered policy outcomes that are very different from those likely to emerge out of the recent wave of preferential trade agreements ptas should economists see this as an efficient institutional hand off where the wto has carried trade liberalization as far as it can manage and is now passing the baton to ptas to finish the job this paper surveys a growing economics literature on international trade agreements and argues on this basis that the wto is not passe rather and subject to some caveats this survey of research to date suggests that the wto warrants strong support while a more cautious view of ptas seems appropriate

international factor movements in the presence of a fixed factor abstract to the basic model of international factor mobility is added a third immobile factor unlike the basic model the factor flows that result from a policy of free mobility are now uniquely determined additionally a large variety of privately optimal national policies is predicted each dependent upon the country s endowment pattern and the fiscal instruments available to it several of the predicted policies e g subsidies paid to migrant factors and simultaneous restrictions on the export of both factors are incompatible with the basic model

trade policy with increasing returns and imperfect competition contradictory results from competing assumptions abstract a number of recent papers derive different results about the effects of trade and industrial policy on imperfectly competitive industries this paper sets out a single model within which policy under different market structures can be examined we consider the four types of market structure generated by oligopoly versus free entry and segmented markets versus integrated markets we conclude that the effects of policy are greater when markets are segmented than when they are integrated and that if transport costs are small policy is more potent when the number of firms is fixed than when there is free entry

trade and trade policy with imperfect competition the case of identical products and free entry abstract this paper analyses intra industry trade between economies containing an imperfectly competitive industry in which firms produce a homogeneous output production is subject to increasing returns to scale and there is free entry and exit of firms trade is shown to unambiguously increase welfare by reducing the degree of monopoly in each market and increasing firm size the effects of differences in technology and endowments on the pattern of trade and welfare are examined import tariffs are shown to raise welfare in the country employing the tariff and the welfare implications of various types of industry subsidy are examined

efficient climate policy with internationally mobile firms a major concern in the design of an incomplete climate agreement is thatfirms that use fossil fuels intensively may respond to emission regulationsby relocating their plants from cooperating to non cooperating countries this paper analyses how the cooperating countries might deal with the issueof firm delocation through emission taxes trade provisions and alocalisation subsidy to mobile firms it is shown that firms should not beinduced to stay in the cooperating countries by lowering emission taxesbelow the pigouvian tax rate incentives to stay should be given partlythrough trade provisions and partly through a localisation subsidy a secondbest solution without localisation subsidies is also discussed in thatcase the efficient emission tax is lower than the pigouvian tax rate finally the paper discusses the implications of the first best and thesecond best policy regimes for the pattern of firm localisation

rain agriculture and tariffs this paper examines whether and how rainfall shocks affect tariff setting in the agricultural sector in a model of strategic trade policy the authors show that the impact of a negative rainfall shock on optimal import tariffs is generally ambiguous depending on the weight placed by the domestic policy maker on tariff revenue profits and the consumer surplus the more weight placed on domestic profits the more likely it is that the policy maker will respond to a rainfall shortage by reducing import tariffs these findings are robust to alternative assumptions about market structure and the timing of the game using detailed panel data on applied tariffs and rainfall for 70 nations the authors find robust evidence that rainfall shortages generally induce policy makers to set lower tariffs on agricultural imports

the abatement market a proposal for environmental cooperation among asymmetric countries we present a model of interaction among technologically asymmetriccountries whose use of an open access environmental resource generatesmutual externalities we show that countries can improve bothenvironmental quality and their individual welfare levels by buying sellingpollution abatement this market mechanism which reduces incentive forfree riding is more effective the larger the technological gap betweencountries

the triple inefficiency of uncoordinated environmental policies when pollution is transboundary and there is international trade a domestic inefficiency may arise in addition to the well known inefficiencies at the international level more precisely there will be a nash equilibrium in which each country chooses a policy that gives it lower welfare than would otherwise be possible given the emission levels of all countries however there will also be a nash equilibrium in which each country chooses tradable emission quotas as its policy instrument to achieve its desired level of emissions in this nash equilibrium welfare in each country is maximised given the emission levels of all countries

commercial policy in a fragmented world there is abundant evidence that the production process of firms is becoming increasingly fragmented internationally in the sense that a final manufactured good will consist of parts that have been manufactured in a variety of different countries studies of manufacturing industries suggest that the share of imported inputs in international trade rose significantly in the 1970 s and 1980 s and that the fragmentation of the production process has been particularly pronounced in industries such as transportation equipment and electrical machinery 1 what difference does it make if trade reflects a fragmentation of the production process rather than the traditional horizontal specialization in final goods in this paper i focus on the implications of fragmentation for the analysis of commercial policy and emphasize two features of vertical relationships 2 the first is the market linkages that are introduced in models of fragmentation due to the interaction between tariffs on final goods and tariffs on intermediate goods the incentives of countries regarding tariff reduction can vary significantly depending on the pattern of trade the second feature of vertical specialization is that producers of final goods often require inputs that are specialized to their particular needs so that vertical relationships may create contracting problems because of the possibility for opportunistic behavior commercial policy may play a role in altering the form of these vertical relationships

environmental consciousness and moral hazard in international agreements to protect the environment abstract a group of countries that can potentially commit to cooperation to protect the environment are identified as environmentally conscious countries conditions are examined under which they can provide self financing side payments too a second group of less environmentally conscious countries so that the two groups form a global or partial stable coalition that agrees to reduce emissions a mechanism that detects cheating is also developed in order to induce the desired emissions even when the emissions level of an individual country cannot be observed by the rest of the participating countries

supply side climate policy on the role of exploration and asymmetric information in the world economy with interdependent markets for fossil fuel deposits and extracted fossil fuel a coalition of countries may fight climate change by purchasing fossil fuel deposits for preservation harstad j polit econ 120 77 115 2012 has shown that the coalition s supply side climate policy implements the first best the present paper focuses on the role exploration and asymmetric information with respect to climate damage plays for the efficiency of unilateral supply side climate policy under the assumption of non strategic exploration and truthful reporting of climate damage the deposit policy turns out to be efficient if exploration is used strategically or the coalition misreports its climate damage however the deposit policy becomes inefficient

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

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

on the efficiency of green trade policy the paper derives conditions for second best environmental policy when there are foreign countries which fail to implement appropriate environmental regulations it is shown that in such cases efficiency in the global economy will not be achieved unless domestic environmental regulations are supplemented by trade provisions the result is independent of whether environmental problems are local or international furthermore when trade provisions are implemented efficiency requires that domestic environmental taxes are fixed at the pigouvian tax rate the results imply that there is an economic rationale for regulating the trade between signatories and non signatories of international environmental agreements efficient trade regulations will either take the form of trade restrictions or trade promotions depending on whether the environmental problem is created by production or consumption activities and whether the net import of the relevant commodity is positive or negative it is argued that an efficient climate agreement signed by a group of fuel importing countries e g the oecd countries should include a subsidy on the import of fossil fuels

cost effective unilateral climate policy design size matters given the bleak prospects for a global agreement on mitigating climate change pressure for unilateral abatement is increasing a major challenge is emissions leakage border carbon adjustments and output based allocation of emissions allowances can increase effectiveness of unilateral action but introduce distortions of their own we assess antileakage measures as a function of abatement coalition size we first develop a partial equilibrium analytical framework to see how these instruments affect emissions within and outside the coalition we then employ a computable general equilibrium model of international trade and energy use to assess the strategies as the coalition grows we find that full border adjustments rank first in global cost effectiveness followed by import tariffs and output based rebates the differences across measures and their overall appeal decline as the abatement coalition grows in terms of cost the coalition countries prefer border carbon adjustments countries outside the coalition prefer output based rebates

no regret potentials and technical innovation a viability approach to integrated assessment of climate policies abstract this paper aims to demonstrate the advantages of a sequential approach to decision making in climate policies this sequential approach is necessary because of the uncertainties regarding both the avoided costs of climate change and the costs of ghg emission abatement this assessment focuses on the minimization of learning time the reduction of technical and institutional inertia and the possible unexpected non linearities in abatement curves a stylized representation of so called no regret short term potentials of long term innovation trends and of backstop technologies is used we show that if we do take care of the inertia constraints in the decision process both policies namely the no regret and the innovation process exploitation becomes crucial in terms of minimization of the learning time

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

brown backstops versus the green paradox abstract anticipated climate policies are ineffective when fossil fuel owners respond by shifting supply intertemporally the green paradox this mechanism relies crucially on the exhaustibility of fossil fuels we analyze the effect of anticipated climate policies on emissions in a simple model with two fossil fuels one scarce and dirty e g oil the other abundant and dirtier e g coal we derive conditions for a green orthodox anticipated climate policies may reduce current emissions the model can also be used to analyze spatial carbon leakage calibrations suggest that intertemporal carbon leakage from 0 to 8 is a relatively minor concern

the economics of trade agreements in the linear cournot delocation model abstract existing theories of trade agreements suggest that gatt wto efforts to reign in export subsidies represent an inefficient victory for exporting governments that comes at the expense of importing governments building on the cournot delocation model first introduced by venables 1985 we derive new results from this model and use these results to develop a more benign interpretation of efforts to restrain export subsidies in trade agreements and we suggest that the gradual tightening of restraints on export subsidies that has occurred in the gatt wto may be interpreted as deriving naturally from the gradual reduction in import barriers that member countries have negotiated together with existing theories the cournot delocation model may help to provide a more nuanced and complete understanding of the treatment of export subsidies in trade agreements

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

the optimal tariff structure in higher dimensions this paper generalizes to higher dimensions the two good result that the optimal trade policy for a large country is an import tariff a weak form of the optimal tariff requiring that an import export good be most least protected holds under gross substitutability sufficient conditions are obtained for a strong form of the optimal tariff which requires that all imports be more protected than any export and also for the trade tax revenue to be nonnegative in the optimal policy copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

tariff wars in the ricardian model with a continuum of goods this paper describes strategic tarichoices within the ricardian framework of dorn busch fischer and samuelson 1977 using ces preferences the optimum tarischedule is uniform across goods and inversely related to the import demand elasticity of the other country in the nash equilibrium of taris larger economies apply higher tarirates pro ductivity adjusted relative size gdp ratio is a su cient statistic for absolute produc tivity advantage and the size of the labor force both countries apply higher tarirates if specialization gains from comparative advantage are high and transportation cost are low a su ciently large economy prefers the ine cient nash equilibrium in taris over free trade due to its quasi monopolistic power on world markets the required threshold size is increasing in comparative advantage and decreasing in transportation cost i discuss the implications of the static nash equilibrium analysis for the sustainability and structure of trade agreements

the welfare effects of targeted export subsidies a general equilibrium approach a three country model of export subsidies is developed with an exporter an importer and a neutral country which can act on either side of the market when the neutral country is an exporter the country offering a targeted export subsidy always suffers a welfare loss however when the neutral country is an importer the possibility of a paradoxical result that the subsidizing country can gain and the subsidized country can lose is shown to exist and the conditions under which this result occurs are derived the model fails to provide justification on national welfare grounds for widespread use of targeted export subsidies such as the export enhancement program

the size of trading blocs market power and world welfare effects abstract we construct an n country n commodity trade model to analyze the implications of bloc size for nash equilibrium tariffs and welfare the relationship between the absolute size of symmetric trading blocs and their market power is ambiguous and we illustrate how this relationship varies with model parameters in contrast sufficiently large increases in the relative size of a bloc enhance its relative market power and cause the welfare of its country members to rise above the free trade level we establish the existence of an optimal bloc size and study the dependence of optimal size on the parameters of the model

international factor mobility minimum wage rates and factor price equalization a synthesis this paper examines the behavior of a small open economy facing perfectly elastic supply curves for some of its productive factors in particular the paper derives some comparative statics properties of such economies compares them with the properties of otherwise identical economies in which all factor prices are determined endogenously and investigates the relationship between factor price rigidities factor price equalization and the pattern of specialization among the new results which are proved it is shown that as more and more factor price rigidities are imposed on an economy it comes closer to a state of factor price equalization

substitution between biofuels and fossil fuels is there a green paradox we show that i subsidies for renewable energy policies with the intention of encouraging substitution away from fossil fuels may accentuate climate change damages by hastening fossil fuel extraction and that ii the opposite result holds under some specified conditions we focus on the case of subsidies for renewable resources produced under increasing marginal costs and assume that both the renewable resources and the fossil fuels are currently in use such subsidies have a direct effect and an indirect effect working in opposite directions the direct effect is the reduction in demand for fossil fuels at any given price the indirect effect is the reduction in the current equilibrium price for fossil fuels which tends to increase the amount of fossil fuels demanded whether the sum of the two effects will actually result in an earlier or later date of exhaustion of the stock of fossil fuels depends on the curvature of the demand curve for energy and of the supply curve for the renewable substitute

optimal trade policy with trade imbalances abstract optimal trade and capital control policies are characterized under a dynamic model with endogenous trade imbalances in the absence of capital controls optimal trade protection is counter cyclical optimal use of capital controls however dampens the time variation of optimal trade taxes generally trade imbalances are not predictive of optimal policy however optimal trade policy and equilibrium trade imbalances move together when a country grows consistently faster or slower than the rest of the world quantifying the model for the u s economy shows that welfare gains from optimal policy are largely due to static terms of trade effects implying that gains from time varying tariffs or capital controls are small

a distributional argument for supply side climate policies this paper presents a distributional argument for the use of supply side climate policies whereby carbon emissions are controlled through i depletion quotas or ii permanent confiscation of a fraction of the in situ carbon stocks the modeling considers intertemporal competitive equilibria in the cobb douglas version of the dasgupta heal solow stiglitz model of capital accumulation and costless resource extraction it is shown how policies i and ii preserve the functional distribution of income between capital owners and resource owners compared to the case where no climate policy is needed while suggested demand side policies do not such observations are of interest as avoiding functional redistribution may facilitate climate change negotiations the paper discusses policy implications of the analysis outside the simplified setting of the stylized model

a theory of capital controls as dynamic terms of trade manipulation we develop a theory of capital controls as dynamic terms of trade manipulation we study an infinite horizon endowment economy with two countries one country chooses taxes on international capital flows in order to maximize the welfare of its representative agent while the other country is passive we show that a country growing faster than the rest of the world has incentives to promote domestic savings by taxing capital inflows or subsidizing capital outflows although our theory of capital controls emphasizes interest rate manipulation the pattern of borrowing and lending per se is irrelevant

multilateral tariff cooperation during the formation of customs unions abstract we study the implications of customs union formation for multilateral tariff cooperation we model cooperation in multilateral trade policy as self enforcing in that it involves balancing the current gains from deviating unilaterally from an agreed upon trade policy against the future losses from forfeiting the benefits of multilateral cooperation that such a unilateral defection would imply the early stages of the process of customs union formation are shown to alter this dynamic incentive constraint in a way that leads to a temporary honeymoon for liberal multilateral trade policies we find however that the harmony between customs unions and multilateral liberalization is temporary eventually as the full impact of the emerging customs union becomes felt a less favorable balance between current and future conditions re emerges and the liberal multilateral policies of the honeymoon phase cannot be sustained

buy coal and act strategically on the fuel market abstract a coalition of given size fights climate change by a policy of purchasing fossil fuel deposits and it seeks to manipulate the fuel price in its favor assuming that non signatories are price takers in the fuel market harstad 2012 designs a policy of trading deposits that attains efficiency despite the coalition s option to act strategically in the fuel market the deposit transactions constituting that policy include the trade of deposits which the non signatories would have exploited and the coalition will exploit the present paper shows that in a proper subset of economies a simpler policy is also efficient that consists of deposit purchases for preservation only in these economies the coalition is unable to raise its welfare above the level in the benchmark case of fuel price taking in the economies where the efficient policy requires deposit transactions for exploitation the coalition is better off and the non signatories are worse off than in case of price taking

welfare enhancing export subsidies this paper shows that export subsidies on marginal goods and those on nonmarginal goods have opposite welfare effects for the country imposing these subsidies where marginal goods are the ones that would be exported by only a small amount or not at all under free trade but whose export can be promoted considerably by export subsidies the former enhances the imposing country s welfare while the latter worsens it the paper also throws light on related issues such as industrial targeting policy

optimal policy toward international factor movements with a country specific factor abstract this paper examines the optimal taxation of factor movements in a three factor model where two factors are potentially mobile results emphasize the role of substitutability or complementarity between factors in determining the optimal pattern of factor flows in particular a result analogous to the ramaswami result on the desirability of factor importing over factor exporting will hold if factors are complements but may not hold if they are substitutes also a capitalexporting country that cannot tax imported labor should allow labor imports when capital and labor are substitutes but may not allow labor imports if they are complements

a welfare comparison between vers and tariffs under the gatt economic theory suggests that tariffs are welfare superior to voluntary export re straints vers in the presence of perfect competition however with imperfectly competitive markets some authors have found that vers may be welfare superior to tariffs we reconsider the comparison between a ver and a tariff in the context of gatt based constraints using a model of perfect competition we show that a ver can welfare dominate a tariff increase that is accompanied by a compensatory reduction in the tariff on another good or if the tariff is matched with a retaliatory tariff on domestic exports une comparaison des effets de bien e tre des restrictions volontaires a 1 exportation et des tarifs douaniers dans le cadre du regime du gatt la theorie economique suggere que

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

trade policy with several goods and market linkages abstract in this paper we demonstrate a substantial role for trade policy in a competitive model finding that a an export subsidy may benefit the exporting country b a voluntary export restraint may benefit the importing country and c a countervailing duty may benefit the importing country even if it has no effect on the foreign price of that good these results are in sharp contrast to the conventional wisdom from two good or partial equilibrium models and are derived in a framework of several goods the pattern of substitution and complementarity across goods or market linkages determines the role for trade policy

joint implementation strategic reactions and possible remedies this paper investigates the promising proposal of joint implementation ji to mitigate greenhouse gas emissions this was ultimately the only concrete outcome of the conference on climate change in berlin albeit restricted to a pilot phase the basic idea given the public s awareness of global warming sounds economically plausible the industrialized countries the only ones required to stabilize and lower carbon emissions can search for cheaper reductions of greenhouse gas emissions in developing countries and economies in transition however this proposal leads to strategic reactions by developing countries reinforced by the fact that this cheating coincides with the interest of the industrialized country in short this proposal will lead to cheating given asymmetric information and will thus produce largely faked reductions in emissions on the constructive side an efficient mechanism retaining the spirit of ji is derived which deters strategic reactions this differs from a usual principal agent problem through an additional hierarchical layer a global authority e g the conference of parties on climate change an industrialized country and a developing country the unavoidable loss that is even associated with an optimal scheme due to strategic behavioural reality the first best optimum is unattainable except at the top leads of course to much less glamorous predictions in emission reductions moreover the implicit subsidization scheme focuses and favours on already efficient partners

environmental taxes and international spillovers the case of a small open economy abstract in the existence of trade interaction a sub global climate change policy can generate externality which can cause competitiveness issues for the producers in compliant regimes however among compliant regions a small economy also receives a significant spillins effect when a large economy takes some regulatory actions that affect particularly the world prices of traded commodities this externality can have notable impacts on the efficiency and pollution abatement opportunities of the small compliant regime with a trivial converse effect in some cases these impacts on the efficiency and emissions abatement can be in opposite directions we capture these findings by incorporating two protection polices i e border tax adjustment and free emissions allocations to emission intensive and trade exposed industries in a multi region analytical and numerical general equilibrium modeling framework these results convey that the large economies hold leading strategic positions towards a cooperative global climate change movement because of their policies influences on the small economies

trade taxes and international investment this paper demonstrates that international investment disturbs the conventionally understood equivalence between import tariffs and export taxes fundamentally remittances to foreigners introduce an additional pecuniary channel between countries so that two good lerner symmetry generally will not hold moreover because tariffs subsidize investors in the local import competing sector while export taxes can extract rent from foreign investors in the export sector the pattern of international investment will influence government preferences over trade policy instruments as well as levels notably trade tax symmetry is restored by introducing a third policy tool in the form of a direct a tax on international remittances ce memoire montre que l investissement international bouscule l equivalence canonique presumee entre tarifs a l importation et taxe a l exportation fondamentalement des versements aux etrangers ouvrent un canal additionnel entre pays qui fait que la symetrie de lerner ne tient plus de plus parce que les tarifs subventionnent les investisseurs dans le secteur national protege alors que la taxe a l exportation peut extraire une rente des investisseurs etrangers dans le secteur d exportation le pattern d investissement international va influencer les preferences du gouvernement quant a l usage d un instrument de politique commerciale ou un autre et quant a la vigueur avec laquelle il sera utilise la symetrie des taxes sur le commerce international est restauree en introduisant un troisieme intrument de politique sous la forme d une taxe directe sur les versements internationaux

international r d rivalry and industrial strategy this paper presents a theory of government intervention which provides an explanation for industrial strategy policies such as r d or export subsidies in imperfectly competitive international markets domestic net welfare is improved by the capture of a greater share of the output of rent earning industries although the subsidy ridden noncooperative international equilibrium is jointly suboptimal behaviour of governments and firms is modelled as a three stage subgame perfect nash equilibrium the assumption that the government is the first player in this game allows it to influence equilibrium outcomes by altering the set of credible actions open to firms

robust policies to mitigate carbon leakage abstract unilateral climate policy induces carbon leakage through the relocation of emission intensive and trade exposed industries to regions without emission regulation previous studies suggest that emission pricing combined with border carbon adjustment is a second best instrument and more cost effective than output based rebating we show that the combination of output based rebating and a consumption tax for emission intensive and trade exposed goods can be equivalent with border carbon adjustment moreover it is welfare improving for a region that implements emission pricing along with output based rebating to introduce such a consumption tax the welfare gain is particularly large if output based rebating is already implemented for a sector that is not much exposed to leakage e g due to uncertainty about exposure or due to lobbying activities thus supplementing output based rebating with a consumption tax constitutes robust policies to mitigate carbon leakage