A Dynamic Approach to the Environmental Effects of Trade Liberalization

Fadaee, Mehdi (2010) A Dynamic Approach to the Environmental Effects of Trade Liberalization. Bologna: Dipartimento di Scienze economiche DSE, p. 22. DOI 10.6092/unibo/amsacta/4494. In: Quaderni - Working Paper DSE (746). ISSN 2282-6483.
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Abstract

In this paper, we develop a two-country world differential game model with a polluting firm in each country where there is transportation cost to investigate the equilibrium of the game between firms when they decide to trade or not and to see under which conditions social welfare coincides with the market equilibrium. We find out that in the static game bilateral trade is always the equilibrium for any acceptable transportation cost while in the dynamic game social planner can prevent the inefficient outcome by imposing and determining the proper amount of Pigouvian taxation.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Fadaee, Mehdi
Keywords
Environmental pollution, International trade, Differential game, Open-loop strategy, Feedback strategy
Subjects
ISSN
2282-6483
DOI
Deposit date
28 Jan 2016 13:16
Last modified
28 Jan 2016 13:16
URI

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