Skip to main content
×
Home

Trade sanctions and green trade liberalization*

  • ALIREZA NAGHAVI (a1)
Abstract
ABSTRACT

This paper studies the impact of a World Trade Organization withdrawal of trade concessions against countries that fail to respect globally recognized environmental standards. We show that a punishing tariff can be effective when environmental and trade policies are endogenous. When required standards are not too stringent with respect to the marginal damage of pollution, compliance along with free trade as a reward is the unique equilibrium outcome. A positive optimal tariff in the case of non-compliance prevents complete relocation to pollution havens, but only works as a successful credible threat and does not emerge in equilibrium.

Copyright
References
Hide All
Barrett S. (1994), ‘Strategic environmental policy and international trade’, Journal of Public Economics 54: 325338.
Barrett S. (1997), ‘The strategy of trade sanctions in international environmental agreements’, Resource and Energy Economics 19: 345361.
Conconi P., Perroni C., and Riezman R. (2008), ‘Is partial tax harmonization desirable?’, Journal of Public Economics 92: 254267.
Eskeland G. S. and Harrison A. E. (2003), ‘Moving to greener pastures? Multinationals and the pollution haven hypothesis’, Journal of Development Economics 70: 123.
Grether J. M. and de Melo J. (2004), ‘Globalization and dirty industries: do pollution havens matter?’, in Baldwin R. and Winters A. (eds), Challenges to Globalization: Analyzing the Economics, Chicago: University of Chicago Press, pp. 167208.
Hoel M. (1997), ‘Environmental policy with endogenous plant locations’, Scandinavian Journal of Economics 99: 241259.
Javorcik B. K. and Wei S. J. (2005), ‘Pollution havens and foreign direct investment: dirty secret or popular myth?’, Contributions to Economic Analysis and Policy 3: 12441244.
Ludema R. and Wooton I. (1994), ‘Cross-border externalities and trade liberalization: the strategic control of pollution’, Canadian Journal of Economics 27: 950966.
Markusen J. R., Morey E. R., and Olewiler N. D. (1993), ‘Environmental policy when market structure and plant location are endogenous’, Journal of Environmental Economics and Management 24: 6986.
Motta M. and Thisse J. F. (1994), ‘Does environmental dumping lead to delocation?’, European Economic Review 38: 563576.
Naghavi A. (2007), ‘Can R&D inducing green tariffs replace international environmental regulations?’, Resource and Energy Economics 29: 284299.
Neary J. P. (2004), ‘Europe on the road to Doha: towards a new global trade round?’, CESifo Economic Studies 50: 319332.
Ulph A. and Valentini L. (2001), ‘Is environmental dumping greater when plants are footloose?’, Scandinavian Journal of Economics 103: 673688.
Zigic K. (2000), ‘Strategic trade policy, intellectual property rights protection, and North-South trade’, Journal of Development Economics 61: 2760.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Environment and Development Economics
  • ISSN: 1355-770X
  • EISSN: 1469-4395
  • URL: /core/journals/environment-and-development-economics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Metrics

Full text views

Total number of HTML views: 1
Total number of PDF views: 14 *
Loading metrics...

Abstract views

Total abstract views: 83 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 23rd November 2017. This data will be updated every 24 hours.