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Trade and environment: policy linkages

Published online by Cambridge University Press:  03 November 2000

BRIAN R. COPELAND
Affiliation:
Department of Economics, University of British Columbia, Vancouver, BC Canada V6T 1Z1. Tel: (604) 822-8215. Email: [email protected]

Abstract

This paper develops a simple model to investigate linkages between trade and environmental policy. In the case of purely local pollution, trade liberalization without constraints on environmental policy induces a non-cooperative game between countries in pollution policy. Without any agreement on environmental policy, trade negotiations are unlikely to lead to a point on the Pareto frontier. When pollution is global, countries may be expected to disagree on linkages between trade agreements and environmental agreements. Countries importing pollution-intensive goods have an incentive to try to link trade agreements with environmental agreements, while countries exporting pollution-intensive goods have an incentive to try to obtain a binding commitment to free trade prior to negotiations over global pollution.

Type
Research Article
Copyright
© 2000 Cambridge University Press

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Footnotes

This paper has benefited from helpful comments from Scott Barrett, Steve Charnovitz, the referees, and participants in the GETS workshop on trade and the environment.