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Trade liberalization and the choice of pollution abatement

Published online by Cambridge University Press:  02 April 2024

Takumi Haibara Open the ORCID record for Takumi Haibara [Opens in a new window]
Takumi Haibara*
Affiliation:
Faculty of Economics, Aichi University, Nagoya, Aichi, Japan
*
*Corresponding author: Email: haibarat@vega.aichi-u.ac.jp
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Abstract

It is well known that a consumer price-neutral reform of consumption taxes and import tariffs is welfare-improving. This paper shows that such price controls are inferior to quantity controls in terms of welfare improvement. The paper next turns to a comparison of different abatement strategies. Whether or not policy changes should fix private abatement or public abatement relates to the level of earmarking, and depends on the relationship between private production and public abatement. There are cases in which increased public abatement only improves welfare by more than both increased private and public abatement together. The paper recommends that environmental earmarking in the form of public abatement should be delivered to cushion price hikes and sustain private energy consumption.

Keywords

earmarkingprice controlsprivate abatementpublic abatementquantity controls

JEL classification

Q56: Environment and Development • Environment and Trade • Sustainability • Environmental Accounts and Accounting • Environmental Equity • Population Growth H20: General F18: Trade and Environment
Type
Research Article
Information
Environment and Development Economics , Volume 29 , Issue 3 , June 2024 , pp. 257 - 277
Copyright
Copyright © The Author(s), 2024. Published by Cambridge University Press

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