Trade and Commodity Taxes as Environmental Instruments in an Open Economy (2020)
© 2020, Emerald Publishing Limited. Purpose: In a simple reciprocal dumping model of trade, this study scrutinizes the strategic role of trade and commodity taxes as environmental instruments when consumption of an imported product generates pollution. The results suggest that for sufficiently small values of the marginal disutility from pollution, commodity taxes can be preferred over import tariffs, and compared to the case of trade policies, free trade can be welfare dominating even for higher values of the marginal disutility from pollution when commodity taxes are used strategically as environmental instruments. Design/methodology/approach: The authors employ a reciprocal dumping model of trade. Findings: A sufficiently high marginal disutility from pollution (or sufficient asymmetries between the countries in terms of their marginal disutility from pollution) may jeopardize bilateral trade, especially if countries are given the option to set tariffs freely for imported goods (consumption of which generate environmental pollution). For sufficiently weak transboundary pollution and sufficiently low marginal disutility from pollution, (1) both Nash trade and domestic policies may prove to be helpful in addressing consumption-based pollution, and (2) it is possible to show in such a case that Nash domestic policies may be preferred over Nash trade policies, especially when both transboundary pollution and the trading partner's marginal disutility from pollution are sufficiently low. Originality/value: The novel contribution of this paper is (1) to capture asymmetries among trading partners in terms of how much they account for environmental pollution when deciding on their (domestic/trade) policy measures and (2) to focus on environmental degradation that is caused by final consumption of a product imported from a trading partner.
CitationKoska OA, Stähler F, Yeni O, others (2020). Trade and Commodity Taxes as Environmental Instruments in an Open Economy. Journal of Economic Studies. 23 June 2020. Emerald. ERC-Economic Research Center, Middle East Technical University. Emerald.
This citation is automatically generated and may be unreliable. Use as a guide only.
Keywordsinternational trade; consumption-generated pollution; trade policy; commodity taxes
ANZSRC Fields of Research35 - Commerce, management, tourism and services::3507 - Strategy, management and organisational behaviour::350706 - International business
15 - Commerce, Management, Tourism and Services::1503 - Business and Management::150309 - Logistics and Supply Chain Management
38 - Economics::3899 - Other economics::389902 - Ecological economics
RightsCreative Commons Attribution Non-commercial International Licence 4.0 (CC BY-NC 4.0)
Showing items related by title, author, creator and subject.
Ahmad, R.; Vargo, J.; Pulakanam, V.; Chowdhury, M. (University of Canterbury. Department of Accounting and Information SystemsUniversity of Canterbury. Management, Marketing, and Entrepreneurship, 2015)The concept of maturity model proposes that a process has a lifecycle, which is assessed on the basis of how the process is defined, managed, measured and transformed over time. A framework to develop supply chain (SC) ...
Donovan, Julie; Castka P; Hanna M (Q21 Research Group, University of Canterbury, New Zealand, 2017)Supply chain management is an important part of New Zealand (NZ) economy yet relatively little empirical evidence is available about the practices of NZ firms and their impact on supply chain performance. In this study, we ...
The Value of Gender Equality in EU-Asian Trade Policy: an assessment of the EU’s ability to implement its own legal obligations Masselot, A.; Garcia, M. (University of Canterbury. Department of Accounting and Information Systems, 2013)This paper aims to assess the tensions and contradictions that exist between the European Union’s (EU) internal and international legal obligations to achieve gender equality in all its activities, and its engagement in ...