We examine the impact of freer trade on equilibrium pollution tax and welfare when markets are imperfectly competitive and pollution is transboundary. In the symmetric case, bilateral tariff reduction (i) strengthens environmental protection if and only if pollution is sufficiently harmful, and (ii) decreases welfare in the neighbourhood of free trade.
|Journal||Economics Bulletin - AccessEcon|
|Publication status||Published - 2009|
Baksi, S., & Ray Chaudhuri, A. (2009). On trade liberalization and transboundary pollution. Economics Bulletin - AccessEcon, 29(4), 2605-2612. http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I4-P13.pdf