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Mark R Metcalfe and John C Beghin
''Piecemeal Reform of Trade and Environmental Policy When Consumption Also Pollutes''
( 2015, Vol. 35 No.4 )
We incorporate endogenous (price-responsive) consumption pollution into a dual trade model to assess welfare effects of coordinated trade and environmental piecemeal reform in a small, open and distorted economy. Pollution is generated by production and consumption. Producers control the level of pollution and face incentives to abate both types of pollution. We identify sufficient conditions for welfare-improving reforms of trade and environmental policies. An additional domestic environmental policy instrument must be imposed on exportables because of their supply response to foreign environmental taxes.
Keywords: Trade and environment, piecemeal reform, policy coordination, harmonization
JEL: F1 - Trade: General
Q2 - Renewable Resources and Conservation: General
Manuscript Received : Jul 28 2014 Manuscript Accepted : Nov 20 2015

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